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Purchase Order: Client Requesting for Refund on Mobilization

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asked on Jan 11, 2019 at 00:54
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edited on Jan 18, 2019 at 04:53
 
I'm a small business owner providing support service. Last year we got an order from company Z. Being small that we are and making sure we got paid, our payment term include a mobilization fee to be paid upon purchase order (PO).

We issued mobilization invoice to them upon receiving the PO but only received a small amount from the total invoice issued. We have done some services upon getting the PO but after a while they no longer contact us and did not request for any support from us. We emailed asking for status and mentioned that we are on stand by for any support request. No reply received.

Recently we received a call from them asking for refund for the mobilization paid. Reason being is that they already engaged someone else to do the job (presumably at lower cost).

Can they made such request and do we still entitled for the payment as we were never told they want to cancel the purchase order?

Thanks.
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answered on Jan 11, 2019 at 01:12
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Recently we received a call from them asking for refund for the mobilization paid. Reason being is that they already engaged someone else to do the job (presumably at lower cost).
Unless there is an earlier agreement allowing refunds, there is no need to refund.
Anybody can request, but of course cannot get the refund.

Can they made such request and do we still entitled for the payment as we were never told they want to cancel the PO?
Legally speaking, a Purchase Order (PO) cannot be cancelled unless you agree to the cancellation.
If you do not agree to the cancellation, you can write a letter to them stating that you do not agree to the cancellation and will take legal action if they cancel or did not honor the PO.  ( meaning they did not go ahead with the order )

If still no news, after 1 month, you can ask a lawyer to send a Letter of Demand them asking for damages for not honoring the PO.
For example, if the PO is RM 100k, and your cost to do the job is RM 20k, then your expected profit is RM 80k.  Then the damages from loss of profit would be RM80k which should be the amount you demand.

After one more month, if still no news, then you can ask the lawyer to sue them.
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answered on Jan 11, 2019 at 01:26
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edited Jan 18, 2019 at 04:55
 
@vkpc,

Thanks a lot for your answer. Now I can sleep better tonight.
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