Atlantic Diving Supply, Inc. v. Bancroft Global Development - Case Study Example

? Atlantic Diving Supply, Inc. v. Bancroft Global Development Introduction Atlantic Diving Supply Inc and Bancroft Global Development are suing each other over a deal consisting of 18,000 pairs of boots. Atlantic Diving Supply Inc (ADS) is Virginia Beach based military gear contractor and Bancroft Global Development is a non-profit organization from Washington, D.C. The lawsuit is over a deal between the two wherein Atlantic Diving Supply Inc was to supply 18,000 pairs of boots to Bancroft Global Development at $1.4 million. The boots were to be used by African troops in Somalia fighting Al al-Quaida-linked militants (McCabe, 2012). Actions leading to the lawsuit A lawsuit was filed by ADS in Virginia Beach Circuit Court in February of 2011. ADS alleged that Bancroft had ordered and accepted the boots along with other products such as battle-dress uniforms, pistol belts and field jackets but only had paid for half of it. Bancroft is accused of breach of contract and conversion. ADS argued that Bancroft held on to the goods that it had actually rejected and hence demanded $1 million. A statement by ADS’s attorney said that Bancroft owed ADS money and hence they are suing it (WTOP, 2012). Bancroft on the other hand countersued ADS for $1.1 million. It accused ADS of breach of contract and fraud. Bancroft argued that the boots supplied were of poor quality and fake military boots. The boots were not intended for military use as they were designed to be costume boots. The quality of the boots is said to be so poor that it would not even serve the purpose of daily regular use, let alone military use (WTOP, 2012). The main reason for the disagreement is that the boots were of poor quality and wore out on just a few uses. Bancroft says that it relied on ADS to provide boots that were of military specification. Even though this was not mentioned in the purchase order, the specifications of the product needed were mentioned in the purchase order by DynCorp which was forwarded to ADS. Hence Bancroft argues that as ADS was aware of the military specifications of the product and still provided with low quality products. Therefore it has indulged in fraud and breach of contract. Bancroft had arranged for the delivery to be picked up by a third party and have it delivered to Uganda. There were no inspection checks done and it is only after the problems surfaced, that an official inspection was conducted and the boots officially rejected (McCabe, 2012). ADS has argued against the above allegation by saying that the products were selected based on the price quote by Bancroft. There are no military boots available in their price range. It also argued that all military specification was carefully removed from the purchase order by Bancroft in order to save money. They argued that Bancroft wanted to the cheapest products at the earliest and they were delivered what they asked for. ADS also blame Bancroft of taking too much time in rejecting the goods. It argues that if the products were detective, then should have been immediately rejected (McCabe, 2012). Judgement has not been reached yet and evidences have been submitted by both parties to prove their claims. Risk Management by both Organizations There are various risk management steps that could have been taken by both organizations to avoid. First and foremost, each organization should have added an expressed condition in the contract that would ensure that their interests are served. An express condition would explicitly set forth the terms and conditions of the deal (Salzedy & Brunner, 1999). Bancroft should have added a condition in the agreement to meet the specific quality requirements which would mean that the ADS would have been under the obligation to meet the quality requirements, in this case military specifications. ADS on its part could have added a condition to have the payment made within a specified time length or added a condition would have required Bancroft to reject the products within a time period after which the order would have considered accepted. This would impose an obligation on Bancroft to reject the product within the deadline or make the payment irrespective of acceptance or not. Apart from the above, Bancroft on its end should have investigated the quality of the product or even asked for samples before have the whole delivery shipped to Uganda. On the other hand, ADS should have insisted on a quality check by Bancroft and should have got the products approved. Ethical Considerations Ethical considerations that reflect in the laws applicable to this case are good faith and fair dealing (Helewitz, 2010). It is clear that Bancroft had brought it to the notice of ADS that the products were to be used by military personnel. It expected ADS to function in good faith and deliver products that would serve the purpose. Bancroft also should have ensured that specifications of the product to be listed in the purchase order in order to ensure fair dealing. Another important consideration is that both organizations obligated to perform ethically with respect to the society. Knowing the purpose of the products, ADS should have ensured the quality of the products or insisted on higher prices to meet the requirements. Bancroft on other hand being a non-profit organization should not have tried to make profits out of the deal. Sources of Law relevant to the case Commercial tort and contract law are the ones that are relevant to the case. Management of both the organizations can use the knowledge of these laws better design the terms and conditions of the contracts that they get into in the future. There are numerous parameters that if considered prior to a signed contract can lead to better clarity of the requirements from both parties. Recommendation Both organizations should try to negotiate an alternate resolution in the presence of external negotiators. A compromise must be reached where in both parties can minimize the damage that will be caused. One of the possible solutions that both the companies could agree on is for ADS to have the unused lot that is stored in Uganda to ADS and have them resell it to other vendors and the profits shared among the two. The onus here is to ensure that both parties recover their investments or losses. This would mean that ADS will have to reduce the profit margin. References Helewitz, J.A. (2010). Basic Contract Law for Paralegals, Sixth Edition. NY: Aspen Publishers. McCabe, R. (2012). Virginia Beach Company in legal battle over boots. [Online]. Available at: http://hamptonroads.com/2012/04/virginia-beach-company-legal-battle-over-boots. Accessed on 15 June 2012. Salzedy, S. & Brunner, P. (1999). Briefcase on Contract Law. London: Cavendish Publishing Limited. WTOP (2012). 18,000 boots at center of VA. legal battle. [Online]. Available at: http://www.wtop.com/41/2846093/18000-boots-at-center-of-Va-legal-battle-. Accessed on 15 June 2012. Read More