Charging for Loan Equipment
Discussion
My business borrowed some equipment for demo purposes in 2011, a bit over 5 years ago. We used it for a few demos, and introduced some of our existing customers to this supplier (beyond the introduction we weren't/aren't involved in their agreements). For the last few years the equipment has sat in it's box in the corner of our warehouse, unused.
Now we've received a letter from the company that lent us the equipment saying that they've just realised that we still have it, and that they only loaned it to us for one month. Apparently, they now intend to charge us for it's hire at their 'standard rate'. They claim that the value of the equipment is (or was, it's very obsolete technology now) around £1000.
I don't know what their 'standard rate' for hire is, they don't mention it in this letter, or how much they think is due, apparently an invoice will follow. However, I suspect that for a five year period it could well be approaching £4000! It is 'dummy equipment' that they supplied us with, it can't actually be used without being activated and linked to an online account (managed by them), so it can't be used in the manner that an end user hiring it under their standard agreement would.
I've looked back at the 'Pilot Agreement' that we signed, and it does indeed state that the loan was for a period of one month. In the small print it does also say that if it's returned late we 'may incur penalty charges at (an unspecified) daily rate'.
The bloke I was dealing with there at the time was very laid back about the loan duration. I seem to recall that he basically suggested (verbally), that we could keep it as long as we needed it for demo purposes. I certainly don't remember agreeing to a fixed one month loan, but obviously that is the agreement I signed. This is the first time they've contacted us regarding the loan equipment since they sent it out, over 5 years ago. Certainly they've never asked for it back, or told us that any charges were being incurred.
They are a huge, international company who manufacture hundreds of thousands of these devices, a couple of demo/loan ones is really pretty inconsequential to them. Not particularly relevant, but they've earned at least £10k worth of ongoing business from out referrals over the years. Normally, they rent this stuff out for 3 years (to end users) and then it gets written off at the end of the hire (or replaced with a new 'upgrade' if they re sign).
I'm not sure how to handle this now? It seems like a bit of a fishing trip after all this time. I think their letter is a bit misleading, mentioning the value of the equipment, but no indication of what they think we owe them in terms of hire of it (which is likely to be many times more than the cost of it).
I can see three options here:
1) Admit that we've still got it, return it, wait and see what 'penalty' (their words) they are going to ask for. Then either pay it (not something we could afford), or dispute/fight it. Presumably, it has potential to end up in court (small claims?), and we could argue that their charges are punitive, they haven't asked for it back/mentioned it for 5 years, etc. Is it anything like private parking fines, where they can only charge for their actual losses, rather than 'penalties'? I suppose that they could argue they've lost out on hiring it to an end user at the retail hire rate (although there are a lot of value added service features linked to that, they they haven't provided here).
2) Ignore their correspondence and hope it goes away - does the Limitations Act apply to b2b stuff? Would it become statute barred after 6 years, i.e. less than a year from now?
3) Tell them we returned it at the end of the one month loan. They are asking for details of it's return, is it reasonable that we should have retained proof of delivery for something five years ago?
Just asking for some suggestions on here, I can see us having to take proper legal advice.
Now we've received a letter from the company that lent us the equipment saying that they've just realised that we still have it, and that they only loaned it to us for one month. Apparently, they now intend to charge us for it's hire at their 'standard rate'. They claim that the value of the equipment is (or was, it's very obsolete technology now) around £1000.
I don't know what their 'standard rate' for hire is, they don't mention it in this letter, or how much they think is due, apparently an invoice will follow. However, I suspect that for a five year period it could well be approaching £4000! It is 'dummy equipment' that they supplied us with, it can't actually be used without being activated and linked to an online account (managed by them), so it can't be used in the manner that an end user hiring it under their standard agreement would.
I've looked back at the 'Pilot Agreement' that we signed, and it does indeed state that the loan was for a period of one month. In the small print it does also say that if it's returned late we 'may incur penalty charges at (an unspecified) daily rate'.
The bloke I was dealing with there at the time was very laid back about the loan duration. I seem to recall that he basically suggested (verbally), that we could keep it as long as we needed it for demo purposes. I certainly don't remember agreeing to a fixed one month loan, but obviously that is the agreement I signed. This is the first time they've contacted us regarding the loan equipment since they sent it out, over 5 years ago. Certainly they've never asked for it back, or told us that any charges were being incurred.
They are a huge, international company who manufacture hundreds of thousands of these devices, a couple of demo/loan ones is really pretty inconsequential to them. Not particularly relevant, but they've earned at least £10k worth of ongoing business from out referrals over the years. Normally, they rent this stuff out for 3 years (to end users) and then it gets written off at the end of the hire (or replaced with a new 'upgrade' if they re sign).
I'm not sure how to handle this now? It seems like a bit of a fishing trip after all this time. I think their letter is a bit misleading, mentioning the value of the equipment, but no indication of what they think we owe them in terms of hire of it (which is likely to be many times more than the cost of it).
I can see three options here:
1) Admit that we've still got it, return it, wait and see what 'penalty' (their words) they are going to ask for. Then either pay it (not something we could afford), or dispute/fight it. Presumably, it has potential to end up in court (small claims?), and we could argue that their charges are punitive, they haven't asked for it back/mentioned it for 5 years, etc. Is it anything like private parking fines, where they can only charge for their actual losses, rather than 'penalties'? I suppose that they could argue they've lost out on hiring it to an end user at the retail hire rate (although there are a lot of value added service features linked to that, they they haven't provided here).
2) Ignore their correspondence and hope it goes away - does the Limitations Act apply to b2b stuff? Would it become statute barred after 6 years, i.e. less than a year from now?
3) Tell them we returned it at the end of the one month loan. They are asking for details of it's return, is it reasonable that we should have retained proof of delivery for something five years ago?
Just asking for some suggestions on here, I can see us having to take proper legal advice.
Tell them that you called them after the first month, and asked them to collect the equipment. You're still waiting for them to do so, and perhaps you should charge them for storage.
Point out that (so far) you haven't charged them for any of the customer introductions that you facilitated.
Point out that (so far) you haven't charged them for any of the customer introductions that you facilitated.
Yes, I have got a copy of the original T&C /agreement that I signed. I don't want to post it publicly for fear of them identifying me. I could email it to you Eric? It has the usual stuff in it about them retaining title etc, and the critical bit is pretty much as I worded it above, but in full:
"If the products are returned after the return date the customer may incur penalty charges at a daily rate."
And yes, they did/do pay us commission on our referrals, although our relationship has soured with them for a number of reasons. Primarily because we are small and our referrals amount to such a tiny amount of business to them, that they probably view us as more trouble than we're worth! We haven't given them any (converted) referrals for a long time. Last time I tried to they basically made it impossible for the deal to work out. Not sure if it's coincidence, but the only customer of ours that they have left has just come to the end of their contract term.
The T&C do state that we are responsible for returning the equipment.
"If the products are returned after the return date the customer may incur penalty charges at a daily rate."
And yes, they did/do pay us commission on our referrals, although our relationship has soured with them for a number of reasons. Primarily because we are small and our referrals amount to such a tiny amount of business to them, that they probably view us as more trouble than we're worth! We haven't given them any (converted) referrals for a long time. Last time I tried to they basically made it impossible for the deal to work out. Not sure if it's coincidence, but the only customer of ours that they have left has just come to the end of their contract term.
The T&C do state that we are responsible for returning the equipment.
It does sound like they are in their right to charge as they had expressly stated the situation regarding charges etc in the original terms. However, it's obvious that they didn't really monitor the situation very well and obviously didn't miss not having it.
I'd try and reach some sort of compromise agreement.
I'd try and reach some sort of compromise agreement.
It's difficult to try and start any negotiations while I don't know how much they think we owe. I feel that their letter is inviting me to make a compromise offer based on the retail 'purchase' value they state as £1000, thus admitting/accepting liability. And then they'll come back and say, no actually you owe us (e.g) £10,000 based on our daily penalty rate.
Incidentally, this equipment is almost never sold outright to the end users, always rented. So the retail prices are effectively theoretical, and hugely inflated above the real cost of the equipment in order to justify the rental cost.
Incidentally, this equipment is almost never sold outright to the end users, always rented. So the retail prices are effectively theoretical, and hugely inflated above the real cost of the equipment in order to justify the rental cost.
Call them Tuesday don't bother with emails as it'll get too tied up in legalese thats all bluff and someone'll end one in Regards, then everyone will get all posturing and antsy.
Give them a call, tell them its been sat in the corner, they can send a courier for it and that's the last of it for everyone
Give them a call, tell them its been sat in the corner, they can send a courier for it and that's the last of it for everyone
andy-xr said:
Call them Tuesday don't bother with emails as it'll get too tied up in legalese thats all bluff and someone'll end one in Regards, then everyone will get all posturing and antsy.
Give them a call, tell them its been sat in the corner, they can send a courier for it and that's the last of it for everyone
I'm really not sure of that, going by the way their letter is written. And if it were the case, they'd just have phoned us and asked for it back?Give them a call, tell them its been sat in the corner, they can send a courier for it and that's the last of it for everyone
Eric Mc said:
It does sound like they are in their right to charge as they had expressly stated the situation regarding charges etc in the original terms. However, it's obvious that they didn't really monitor the situation very well and obviously didn't miss not having it.
I'd try and reach some sort of compromise agreement.
EricI'd try and reach some sort of compromise agreement.
I don't think you (or any of us) can form that view without sight of the documents in full.
Without putting to fine a point on it, merely because the purported contract may state the supplier can charge a 'penalty' they may not be entitled to do so.
At the most basic level, if the OP is in breach of any agreement (if one even exists at law), the supplier's remedy is damages.
OP - I think it is for the supplier to set out what it claims it is owed and the basis for that claim.
I would call them up and explain you'll return it to them and that you were not aware of their charges. If they want to continue along the lines of charging, get your sales rep involved and let them know that you will not recommend their product if they continue to persue ... hopefully the rep could fight your corner, as he might lose out on commission and you can continue as you were.
We don't get anything on loan without being invoiced for the full amount, which is then credited when the item is returned to them. We have a credit facility so it not as if we're actually paying for it. It does make things slightly simpler.
We don't get anything on loan without being invoiced for the full amount, which is then credited when the item is returned to them. We have a credit facility so it not as if we're actually paying for it. It does make things slightly simpler.
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