| Question And Answer | |
|---|---|
| Subject: | Contract Related Issues about an Agreement related issue |
| Category: | Allied Law, General Law |
| Querist: | Uday kiran |
| Answered by: | Law Intern |
| Tags: | sales contract |
| Date: | July 9, 2025 |
Our client is a sugar manufacturing company. It has entered into a contract with 3 buyers for selling sugar of 50,000 Tonnes at a fixed price. Those buyers have roped in another buyer for 20,000T out of this 50,000 T, which is a transaction purely amongst the buyers. This new buyer deposited a hefty sum with our client on the advice of original buyers for lifting the quantity of 20,000 T but ultimately lifted only 10,000 T. Hence the original three buyers lifted the balance 10,000 T, to complete the contractual quantity of 50,000 T which they entered into with the company. Now the new buyer is pestering our client to refund him the balance amount which he originally deposited as he lifted only part quantity.
Kindly answer the following queries:
1) Can our client refuse the return of balance money as there is no privity of contract between my client and the new buyer?
2) Since the amount has been accepted initially from the new buyer, basing on the recommendations of original three buyers, Can our client insist that request for refund by the new buyer be routed through the original buyers?
3) Our client is unaware the agreement among old buyers and new buyer and if such agreement clearly mentions that the new buyer has to lift the entire quantity offered to him of 20,000 T (he has lifted only 50%) failing which any penalties are likely to be imposed on him.
4) Can our client insist for lifting the Equivalent quantity of sugar at the latest market discovered price instead of refund?
Since the original buyers stepped into the shoes of new buyer upon lifting his left out quantity, can we ask them to settle them the matter with the new buyer and ask them to lift the equivalent quantity at the latest market discovered price? Kindly clarify.
1) Technically, there is a contract because the client accepted money from the new buyer for delivery of the 20000T and probably also issued a receipt in the name of the new buyer.
2) If there is deemed to be a contract between the client and the new buyer, then the client is responsible for either delivery or refund and cannot insist that the old buyers should address the issue.
3) You are entitled to ask the new buyer to reveal the terms between him and the old buyers.
4) No. If there is a contract spelt out, its terms will apply and the new price cannot be insisted upon.
5) Yes. As the old buyers received the 20000T, they should either return the goods or pay for it separately. They cannot keep the goods and also say they will not settle with the new buyer.