Is a manufactured product considered "shipped" once it has been paid in full, even though the customer s taking advantage of on site free storage?
Asked on Sep 05th, 2011 on Business Law - Michigan
More details to this question:
Parts were manufactured and paid for three years ago, customer made engineering revisions and no longer needs the parts. Manufacturer agreed to store parts for free until customer decides what tho do with the parts. Manufacturer refuses to pay sales commission as parts have not been actually shipped. Does paid in full and title transfer constitute "shipped"?
As a general matter, if the parties have agreed that "shipment" is a condition to payment, then that is their deal, and a court could well find that there is no commission due until the merchandise leaves the seller's plant. Generally, a "sale" is deemed to take place when the risk of loss passes to the buyer; if the seller continues to bear the risk of loss because the parts are being stored at the seller's plant and at the seller's risk, even though the buyer has paid in full, that would be an additional factor to be taken into account in deferring payment of the commission.
An attorney could review the precise terms of your agreement and assist you in determining whether and to what extent you might make an argument that the intention of the parties with otherwise. Without reviewing the detailed terms of the agreement, it is difficult to predict an outcome. Generally speaking, the terms of a written agreement will control the outcome.
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