Interpretation of Deed

Save Share

This query is : Resolved

Mridula (Querist)

22 October 2007
Our Company has A valuable Govt Custmor say X ltd.

The terms & Conditions of purchase order is as under:

In case of delay in delivery beyond specified date then there will be a deduction towards LD (Liquidated damages charges) @ 1% of the basic order value only.

Now,part of ordered goods have been delivered in time. for rest of the goods which we have delivered after due date, the client is deducting LD on TOTAL BASIC ORDER VALUE BUT NOT ON BASIC ORDER VALUE OF UNDELIVERED PORTION.
On another second late delivery of same order, they are deducting LD ON TOTAL BASIC ORDER VALUE BUT NOT ON UNDELIVERED PORTION.

Ex. Total basic order value : 500000
60% delivered in time so no LD

rest 25% 1 week late of basic order value 125000: LD deducted on Rs 500000 whereas it should have been deducted on rs 125000

Rest 15% 2 week late of basic order value rs 75000. LD Deducted on rs 500000 whereas it should have been deducted on rs 75000.

That means for every late delivey ,client id deducting LD on TOTAL BASIC ORDER VALUE.

There is no result of Personel Meetings & disscussions. The client says that we have mentioned in our Order LD on TOTAL BASIC ORDER VALUE but according to my and my directors view it is implied that it is on undelivered portion only.

If iam Correct than what step i should take to recover the payment
Whether i should go for interpretation of deed.

Kindly Solve the problem

R.V.RAO

R.V.RAO (Expert)

22 October 2007 WHAT YOUR CLIENT DOES IS NOT WRONG BECAUSE LD IS LEVIABLE ON TOTAL ODER/BASIC ORDER VALUE.
THE PURCHAE ORDER SAYS SO. THERE IS NO DISTICTION BETWEEN DELIVERED PORTION AND UNDELIVERED PORTION FOR CHARGING LD.
THE PROPER COURSE FOR YOU NOW IS REVISE THE PURCHASE ORDER IN CNSULT WITH THE CLIENT IF HE AGREES,
OTHERWISE IN ALL FUTURE PURCHASE ORDERS YOU MAY TAKE CARE BETWEEN OREDER DELIVERED AND NOT DELIVERED.
R.V.RAO

kumar arumugam

kumar arumugam (Expert)

01 November 2007 as you have said, LD is 1% of the basic order value, so there is no other go, than to alter the contract to suit you after having discussion with the buyer.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now