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When do issues with a supplier become business fraud?

| May 18, 2021 | Breach of Contract

Finding suppliers that offer quality products or materials at a price that still allows your company to profit often requires a lot of networking and research. When you do finally connect with a supplier, you will likely expect them to live up to their reputation.

Unfortunately, there are always those looking to make quick money in the business world. Business fraud can take many forms, including unscrupulous behaviors by companies that supply other businesses. When does a disagreement about a supplier’s obligation to a company change from a mere contractual dispute into outright business fraud?

When companies don’t deliver goods after receiving payment

Payment up front is necessary in certain industries or when working with certain suppliers. Unfortunately, even a company that you have previously had a good relationship with may eventually take one of your payments and then not deliver the items that the money should pay for.

In some cases, companies might engage in shipping fraud, sending empty boxes or otherwise arranging for tracking and shipping records to indicate that a customer received goods that never arrived. Other times, they won’t even go that far, simply failing to deliver and then refusing to refund the payment.

When companies try to trick someone into payment

Did you receive a shipment of supplies that you didn’t order? Some companies try to create contractual payment obligations by sending items to a company they’ve never worked with. Others will increase the frequency of deliveries, hoping they don’t get caught. Delivering goods not ordered can be as expensive for the victim of fraud as non-delivery of paid goods.

When companies intentionally misrepresent what they will deliver

When a construction company pays for a truckload of clean fill for the lawn outside of a project, only to receive colorized sand, they paid a price not reflected in the quality of the product received. Additionally, receiving the wrong product can come with many consequences, including production delays or even a company turning out mediocre products.

Companies dealing with fraudulent business activities from a supplier they contracted with may have few choices but to initiate litigation if the other company won’t take responsibility. The contract signed with the other company, your communications and even documentation of what they delivered, if anything, will help you fight back in court when business fraud negatively impacts your operations.

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