Vendor Issues

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networkn

Networkn
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#155951 14-Nov-2014 09:30

Hi There!

I have a concerning situation arising which I was after some advice about.

We have a customer who was looking for a solution to replace an ageing existing solution.

They spoke to us and I told them I thought a particular brand would be worth considering.

They went direct to the vendor and the vendor came out and demo'd the product, we were not involved at any stage in this part.

Customer then called us and asked for a quote, which we provided and won the business.

Gear went in which we installed and configured. There have been two major problems one of which has taken a fair bit of time to resolve, and the other which now the vendor is saying they aren't sure they can fix
and potentially not for some time until they redevelop part of the solution.

Customer has had a pretty average support experience with the vendor getting dealt with at l1, and escalation not occurring and having to involves the vendors system engineer at almost every step.

Customer has had enough and has threatened the vendor with returning the gear.

We would be out of pocket by our margin, and a reasonably significant chunk of labour if that goes ahead. (Potentially if the vendor refuses, we could end up holding the can for the entire solution)

What WE have done is correct, and we were not asked to qualify the solution, but we have the most to lose at this stage.

Anyone know if I'd have any legal recourse in getting the vendor to provide the customer the refund since it's them that can't get the solution going?

Cheers

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#1175658 14-Nov-2014 09:45

The way I read the above, the customer likely has no justification for asking for a refund of your labour costs.

If the vendor has created verbal or written contract to supply a solution that does X and it fails to do X, then absolutely yes there is legal recourse (if it comes to that). Hopefully there is supporting paperwork otherwise it comes down to he-said, she-said and someone legal will have to decide who they believe.

Re your labor, if it comes to that and the customer relationship is worth more long term than this one job, you could front-foot it and offer them a 50% labour refund. They may appreciate the gesture and accept that. You would have to gauge the weather to see if they are likely to ask. Put it in writing that this is a goodwill gesture and as you took no part in the product selection process that this is not any indication that you are accepting any liability or something similar.

There have been cases in the building industry (so I'm told by a former employer with industry knowledge) where companies have been successfully sued after recommending a solution, even though they took no part in the supply or installation of that solution. Based on that I aim to choose my words carefully when asked about possible solutions. Still occasionally get caught by the unexpected.

Again, I suggest front-footing this, partly to ensure the client gets legal on the vendor not you as piggy in the middle. If the client is large enough, someone within the company that you don't have a relationship with may decide it is easier to have a go at you rather than the vendor so you'll of course want to avoid that.

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timmmay

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#1175662 14-Nov-2014 09:55

Did you charge a total price including gear and service, or did you charge an hourly rate for your service on top of the gear price?

networkn

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#1175665 14-Nov-2014 10:02

timmmay: Did you charge a total price including gear and service, or did you charge an hourly rate for your service on top of the gear price?

Labour Separately.

I believe it's reasonable to ask the vendor to provide the customer with the refund of the product cost the customer paid, if this indeed becomes what occurs. We have not failed in our responsibility in any way, the vendor has told the customer the solution would work for them.

The thing is that the customer won't be further ahead as the customers environment is "unusual" and his requirements are such that I don't believe any other solution in this price range would provide what he wants, but he is already making noises
about not wanting to spend as much money next time. He has talked about compromising with a lesser solution next time around, and we can provide that same level of functionality within the solution already provided.

Invoice came from us however, and I guess I think under the fair trading act, if the vendor refuses to provide a solution that the customer can accept, and refuses to refund us, then we are potentially in some relatively serious trouble.

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#1175668 14-Nov-2014 10:03

I think you should speak to a lawyer with experience in this area.

Dynamic

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#1175670 14-Nov-2014 10:10

networkn: Invoice came from us however, and I guess I think under the fair trading act, if the vendor refuses to provide a solution that the customer can accept, and refuses to refund us, then we are potentially in some relatively serious trouble.

As long as you can demonstrate the negotiations between the vendor and the customer bypassed you,, I don't think your position is completely terrible.

Talk to an experienced COMMERCIAL lawyer. I suggest this guy http://www.pidgeon.co.nz/ or this guy http://www.approachablelawyer.com/

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#1175705 14-Nov-2014 11:02

Depends a lot on your relationship with the client.

It would seem reasonable to me that they would receive a refund on hardware, not your labour to configure it, but IANAL.

Have you discussed this with the client or are they just sabre rattling atm?

1101

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#1175790 14-Nov-2014 13:07

My 2c , we are all just bush lawyers after all.

You sold them the product. It doesnt work. YOU are liable for the refund, incl labour.
You sold it to them (at a profit) , not the products vendor. You also installed & charged to do so.
There is no real contract between the products vendor & that end customer.

This is not to different to the way retailers get stuck with CGA claims that the vendor wont honor. Been there myself. (of course CGA doesnt apply in this case, Sale of goods act possibly does?)

Of course it gets really murky here, as you could argue they asked you to supply a certain product, which you did.
Its not something you stock or sell, it was a one off obtained after their request for you to do so.
But... " I told them I thought a particular brand would be worth considering."

Try the commerce commission, see what their take on this is.

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t0ny

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#1175799 14-Nov-2014 13:21

This is how i see it:

1. You provided the product based on customers requirement. If you could not meet any of the requirements, it should have been discussed with the customer and caveats placed on the delivery of the solution
2. If the customer dealt with the vendor and the vendor said it met their requirements, then you need to get the vendor involved and get them to sort it out at their cost
3. You cannot claim any of the additional labour costs if you misjudged the effort required to deliver the job

Theres a reason why a statement of works needs to be produced prior to delivery of the service and the SOW needs to be detailed enough to cover these types of caveats

networkn

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#1175837 14-Nov-2014 14:21

1101: My 2c , we are all just bush lawyers after all.

You sold them the product. It doesnt work. YOU are liable for the refund, incl labour.
You sold it to them (at a profit) , not the products vendor. You also installed & charged to do so.
There is no real contract between the products vendor & that end customer.

This is not to different to the way retailers get stuck with CGA claims that the vendor wont honor. Been there myself. (of course CGA doesnt apply in this case, Sale of goods act possibly does?)

Of course it gets really murky here, as you could argue they asked you to supply a certain product, which you did.
Its not something you stock or sell, it was a one off obtained after their request for you to do so.
But... " I told them I thought a particular brand would be worth considering."

Try the commerce commission, see what their take on this is.

I think you are missing the point. The installation is not faulty. The product doesn't meet the specific needs of the customer which the VENDOR assured the CUSTOMER directly about.

networkn

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#1175839 14-Nov-2014 14:22

I thought I'd update that one of our engineers has managed to find a workaround to satisfy the customers requirement and so the customer is happy now. Funny how things can change quite quickly, but I still think it's an interesting discussion and would welcome additional commentary on it.

t0ny

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#1175865 14-Nov-2014 14:48

networkn: I thought I'd update that one of our engineers has managed to find a workaround to satisfy the customers requirement and so the customer is happy now. Funny how things can change quite quickly, but I still think it's an interesting discussion and would welcome additional commentary on it.

What i said :) Make sure you do a proper SOW and have caveats in place to protect yourselves in situations like this. PM me if you need help with this type of stuff. I scope stuff for a living :)

networkn

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#1175881 14-Nov-2014 14:58

t0ny:
networkn: I thought I'd update that one of our engineers has managed to find a workaround to satisfy the customers requirement and so the customer is happy now. Funny how things can change quite quickly, but I still think it's an interesting discussion and would welcome additional commentary on it.

What i said :) Make sure you do a proper SOW and have caveats in place to protect yourselves in situations like this. PM me if you need help with this type of stuff. I scope stuff for a living :)

Well to be fair I didn't see any need for a SOW as we were supplying the gear and installing based on standard configs we have done dozens of times before, and the non standard stuff we didn't know about as was discussed between vendor and customer.

SepticSceptic

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#1176204 15-Nov-2014 09:37

The one time you don't do a SOW, is the time it will get ya ...

Handle9

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#1176221 15-Nov-2014 10:00

Regardless of what was discussed between the vendor and the customer you took the order for the solution, not the vendor. The onus is on you to provide the solution described in your offer. If the vendor has caused you a consequential loss by misrepresenting the features of the product it's on you to recover it from the vendor, not the customer. At the end of the day that is what your margin represents, and why the customer engages a solution provider rather than free issuing the gear and engaging you labour only.

To put it simply if you make a margin on something, you take the risk of losing the margin due to issues. If the vendor makes the margin, they take the risk. If you don't take the risk what value are you providing.

If the description in your offer was lacking it's super grey and comes down to what your view on the customer is and what you can get past really.

I work for a very large vendor in a semi related area and it it very grey and we get this type of thing occasionally, particularly in non standard solutions. It's always a bit grey and tricky.

networkn

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#1176288 15-Nov-2014 13:41

Handle9: Regardless of what was discussed between the vendor and the customer you took the order for the solution, not the vendor. The onus is on you to provide the solution described in your offer. If the vendor has caused you a consequential loss by misrepresenting the features of the product it's on you to recover it from the vendor, not the customer. At the end of the day that is what your margin represents, and why the customer engages a solution provider rather than free issuing the gear and engaging you labour only.

To put it simply if you make a margin on something, you take the risk of losing the margin due to issues. If the vendor makes the margin, they take the risk. If you don't take the risk what value are you providing.

If the description in your offer was lacking it's super grey and comes down to what your view on the customer is and what you can get past really.

I work for a very large vendor in a semi related area and it it very grey and we get this type of thing occasionally, particularly in non standard solutions. It's always a bit grey and tricky.

I wouldn't care so much if ONLY my margin was impacted, but we are talking considerably more by labour, not because the labour was faulty, but potentially because the VENDOR, has incorrectly informed the CUSTOMER about the products capability. This is something we were not privy to.

I wonder, if this was you, me and the customer, and you had incorrectly informed the customer the products capability, would you accept us claiming the labour content from you?

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