The Topic for this months Code Corner on Retail World ... a sneak peek
We have spoken to over 50 suppliers in the past 3 months, those that sat back an...
Retailer Behaviour Change
September 19, 2017
Metcash Xmas Fines!
May 9, 2018
Some of you may be participating in Christmas activity with Metcash.
Recent communication from Metcash to suppliers indicates that if orders are delivered later than w/c 10th September, or are incorrect (volume), then they will seek compensation from the supplier – 5% of the total order value in week one and then a further 1% for every subsequent day.
We have a couple of issues with this position:
Many suppliers will have indicated or communicated a delivery date for their Christmas stock. In some instances, this would be after the above date. The discussion/negotiation for the Christmas activity would be deemed to be a ‘contract’, or agreement. The subsequent communication in regard compensation could be interpreted as a change to that contract. In this instance a ‘unilateral and retrospective’ change to the agreement.
There is also unlikely to be any component of the supplier’s existing terms agreement that allows Metcash to levy a fine on any late (regardless of Christmas) deliveries.
Whilst Metcash have not signed the Code, they have agreed to be bound by Parts 1, 2, 4 & 5. Unilateral change to agreement is Part 2 Section 9. The above scenario could be deemed to be a breach.
Part 4 Section 28, requires the retailer or wholesaler to ‘deal lawfully and in good faith’. We do not believe that the proposed fines fall within the definition of good faith. Should you have agreed to the above dates and then had issues outside of your control, it would not be reasonable to fine you sums of money substantially greater than the any likely ‘actual cost’ incurred by Metcash due to the late delivery.
The suggest action could be deemed to be a breach of the good faith clause of the Code whilst Metcash cannot be prosecuted for such a breach they should acknowledge this as a breach of their intent to adopt Code principles
Suggested action: reject Metcashs position on Christmas order delivery fines quoting both unilateral variation to contract and breach of good faith.
On the basis that Metcash have sought to change the details of the Christmas agreement, there could be grounds for suppliers to void the agreement i.e. remove the entire Christmas support package.
It is likely that this would have a greater negative impact on Metcash than the supplier.