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Legal Ethical and Global Environment, Case Study Example

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Case Study

Are guidelines and chargeback fee clauses required by large retailers really negotiable?

The guidelines and chargeback fee clauses required by the large retailers are only negotiable if the vendors comply with all the stated requirements. These requirements mainly touch on logistical issues which range from shipping and packing guidelines, routing instructions, and paperwork documentation. However, the fee charged by large retailers for failing to follow the guidelines, questions whether they are really negotiable. For instance, in the case scenario where a vendor was charged $ 400 for late delivery of goods worth $ 500 indicates that the large scale retailers are mainly interested in exploiting small vendors. In addition to this, small scale vendors have to hire an extra workforce to perform special packaging.  The striking issue is that in such cases, chargeback may still prevail unless the small scale retailers provide proof of compliance. These instances therefore question whether the guidelines and chargeback required by the large retailers are really negotiable.

Should the doctrine of unconscionability be available as a defense to small suppliers challenging onerous performance requirements?

Drawing from the conditions of the transaction in the case, the doctrine of unconscionability should therefore be available as the defense to the small suppliers.  In comparison to the stated case, the large scale retailers are very oppressive and also take the advantage of economic disparity between them and the scale retailers. The large scale retailers tend to allocate all the shipment and delivery risk to the small scale retailers due to their strong bargaining power. This is evidenced a situation whereby a vendor is charged an exaggerated fine of $ 400 for goods worth $ 500.  Other reasons which call for the application of the doctrine of unconscionability include; the large scale retailers knowingly exploit small scale retailers, there is presence of high pressure on the small scale vendors to comply with the logistical requirements and finally, there is great inequality in consideration.

Is it ethical for large retailers to impose “take it or leave it” clauses on small suppliers? Should courts enforce contract provisions that were imposed by economic power rather than crafted by negotiation?

The phrase “take it or leave it” as implied in the case, tends to surpass ethical requirements given the nature of transaction between the large scale retailers and the small suppliers. In this situation, the small suppliers have no other choice apart from what is being offered by the large scale suppliers. Moreover, there are no other means of shipment that can be used by the small scale suppliers which can hedge them from intentional exploitation of the large scale suppliers. This therefore forces them to adhere to the requirements laid down by the large suppliers and hence ruling out the subject of ethics. However, this does not mean that the courts cannot enforce contract provisions that are imposed by economic power rather than negotiation. The element of unconscionability still prevails in such contracts, for instance in the case scenario, there is gross disparity  practiced by the large scale suppliers who rely on their economic power to take advantage of the small vendors and thus pass all the risk of shipment and delivery to them. The large scale suppliers do not provide opportunity to the small vendors to negotiate their interests. These conditions therefore provide the space for small vendors to seek legal intervention from the courts.

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