Problem: Construction manufacturer won’t deliver ducting until we pay additional money
I have a problem with a manufacturer who is refusing to supply goods previously ordered.
My company is a heating and ventilation contractor, and we are currently working on a refurbishment contract, where we are upgrading the existing ventilation system.
Part of the upgrade includes supplying new air ducts, and these have to be specially manufactured. Our usual manufacturer was unable to meet the timescale to manufacture the ducts, but we managed to locate another construction manufacturer and although their quotation was slightly over our budget, at least it could meet the delivery time. We subsequently placed an order and, in accordance with the manufacturer’s terms, we paid a deposit of 25%.
However, just before the ducts were supposed to be delivered, the manufacturer told us that it had made a mistake on the price, and would require an additional amount. It also said that it would not deliver the ducts until we had made payment in full.
We need the ducting ASAP, in order to finish the contract on time. Going to another construction manufacturer will be expensive and will delay the job’s completion date and the client will not be happy, not to mention the damages for delay. What can we do?
Response: Making an economic duress claim on construction manufacturer advice
Ouch! What a nasty manufacturer! This is a difficult one. Essentially, you have a supplier that has goods you absolutely rely on to complete your installation, but it is holding you to ransom.
If the agreement you have entered into is for a fixed price with a definite delivery date, the manufacturer is under an obligation to manufacture the ducting for the agreed price and to deliver on the agreed date. It has no contractual or legal basis to seek additional costs to supply the same product, whilst a failure to deliver on the agreed date is a breach of contract.
The logistics of seeking another manufacturer at this late stage will, as you have pointed out, be expensive both in time and costs and thus, you may therefore have no option but to continue to face this manufacturer in an attempt to secure the goods.
You could look at instigating proceedings and seek the remedy of specific performance, which you would do by making an application to the Court to seek summary judgement. However, and notwithstanding that persuading a court to grant specific performance is very difficult (such orders are at the court’s discretion and not as of right, and usually relate to land, as land is unique whereby goods can usually be substituted), this process will still take time.
I, therefore, suggest that you write back to the manufacturer and set out your position and inform the manufacturer that if it does not deliver by the agreed delivery date and/or insists on receiving an additional sum that it is not entitled to, then you will seek damages for the breach. If the manufacturer continues to refuse to cooperate, you may have to bite the bullet and make the additional payment in order to secure the goods, and then bring a claim for damages, your cause of action being economic duress. Further, you should also look at a way to take delivery of the goods at the same time that the monies are paid over.
© Michael Gerard 2017
The advice provided is intended to be of a general guide only and should not be viewed as providing a definitive legal analysis.