MEMORANDUM
TO: Board of Directors
CC: William White
FROM: Juniper Lopez
DATE: May 5, 2018
SUBJECT: Getting into a 3 year contract with Naturals Inc.
Following the contract we have had with Naturals regarding supplying us with their products for 3 years, a few issues need to be understood.
The advantages of this decision include:
Previous relationship. Since we have done business with this company in the past, we are confident that they will give us products on time and efficiently. This is important to us because we won’t have to worry compared to when we were picking a new company.
Delegate your assignment to our experts and they will do the rest.
Local company. Naturals is also a company in the local community that is regulated by the United States government, which makes cooperating easier.
Profits. Secondly, the choice to get into contract and purchase the products from Naturals is an advantage in that we will make more profits compared to when products are bought from other factories. This is because Naturals’ products are way cheaper than others.
On the contrary, this choice might be disadvantageous in several ways including:
Customer feedback and response. Once a customer will find out that PI sells products containing even 1 % VOC, they will give negative feedbacks which will bring negative results and response in the market, given that they had already advertised a 0% VOC in these paints, which attracted them.
Limited options for suppliers. Additionally, making this choice of getting into a contract would be dangerous because the company now has a limited option for business and supplies (Sherer Law, 2016) . A new company might come in sight along the way, for example in a period of one year, which has a better deal for the products, and totally zero VOC content in the paints. Since we have entered into a contract for three years, we will not be able to work with them; otherwise, we will have serious legal implications for breaching a contract.
Legal risks associated with negligence may include:
Sue for false advertising-Fraud. We already went to the step of advertising and reaching out to the masses concerning the percentage of CVOC n their products. As much as the content is below 8 % according to Naturals, PI has lied to the masses. There might be changes in the regulations that make these products illegal if any percentage exists, therefore, customers might sue the company from the argument that the information they were given is wrong when they find any single content in the paints (Owen, 2010) . While PI might argue that paints with less than 8 % are considered to be of zero- VOC, they will have acted negligently because form the word go they knew that some small content of VOC exists in the paints but instead advertised a zero existence to the customers.
Health complications on customers. Secondly, we are under legal risk of health issues that might come up from customers who use paints. In case a customer gets chemical reactions from these paints, they may sue the company and hold them financially liable for all the medical bills due to negligence (Owen, 2010) . The customer might argue that they wanted a product that has totally zero VOC and that is why they bought the product from PI, only to find out a small percentage of VOC in it. PI will have acted negligent of failure to inform this client in advance when purchasing the product that there might be a slight amount of VOC in it. In such a case, allegations against PI will all be true since it is a different company on its own from the supplies whose products are legally considered VOC free even if they have a small percentage below 8 (Owen D. , 2010; Owen G. , 2001) .
Breach of contract. If Painting Images breaches the contract due to any reasons, such as Naturals inefficiency at any time in operations, they might get legal liabilities. Furthermore, Naturals might provide poor quality products that customers from Painting Images are unwilling to use, but since they have a contract with Naturals, they end up insisting on using the paintings leading to the risk of being sued by other customers for negligence (Owen G. , 2001) .
Bibliography
Owen, D. (2010). The Five Elements of Negligence. Hofstra Law Review , 35 , 1671-1681.
Owen, G. (2001). Duty Rules. University of Carilina Scholar Commons , 54 , 769-684.
Sherer Law. (2016, August 29). Why contract for deed is good for buyer and bad for the seller . Retrieved 5 6, 2018, from Sherer Law: www.shererlaw.com
