Guys this is part of my manufacturing agreement.
I had the amount set to $10,000 per attorney but it the supplier pushed back and said that i need to change to the order amount which is $1,500.00
Who is correct and how do i go about this with my supplier?
or what is the right amount I should put?
It’s a subjective amount and there’s no “right” amount. I always keep things at percentages because damages for a $3K order would be much different than a $100K order.
I will say this though. It usually depends on order and order volume. I’ve had some really big purchase orders before for major retailers. Late shipments happen for various reasons sometimes. Maybe it’s the factories fault and maybe it’s force majeure.
If it’s the factories fault I would make them air ship at their expense to still deliver on time as first option. If they didn’t air ship they would pay the agreement penalty which was a percentage penalty like you have plus a penalty for “lost sales”.
So in the end at worst case scenario where the purchase order was cancelled my penalty is the daily late penalty up until date of PO termination plus the lost sales from the PO. Which of the PO is terminated would be lost sales for the entire PO. And as with anything overseas it’s all negotiable. Back in the days when I worked for national brands we were really tough because of our retail and buyer relationships.
It’s common to base legal fees on the order amount. Consider compromising at a reasonable percentage, like 15%, to balance both sides’ interests. Discuss this with your supplier to find a mutually acceptable solution.
But in your opinion whats a fair liability price to put in place for a $1,500 order?