News: Contract Law
Retail suppliers urged to brush up on 'simple matters' of contract law
11 September 2008
The significance of thorough contract law training has been highlighted by a decision from the Forum of Private Business (FPB) to 'name and shame' retail chain Matalan.
From this month onwards, the clothes and homewares firm is imposing a two per cent deduction on all payments to suppliers, which the FPB deems a "unilateral" move violating basic tenets of contract law.
Matalan revealed that it will use the extra funds to cover TV advertising costs and other marketing activities, thereby "using its size and power to make more money at the expense of its supplier base", according to the FPB.
"A change to contractual terms cannot be made unilaterally," remarked Stuart Blake, the organisation's adviser on payments. "This is a simple matter of contract law."
Suppliers receiving underpayment on deliveries made under contracts agreed before September 1st will automatically be entitled to interest under the terms of their original contracts, he noted.
Mr Blake also urged Matalan's suppliers to re-familiarise themselves with their rights under contract law, including those encompassed by 1998's Late Payment of Commercial Debts (Interest) Act.
The last entry to the FPB's 'hall of shame' before the retail giant was Alliance Boots, which informed its suppliers of an extension to the time period within which it would pay them and demanded a 2.5 per cent discount for the privilege.
