Somewhat "hypothetical" question:
I priced something for a customer, a total of 500 pcs, each individually listed, on an invoice for $100.00 each, for a total of $50k.
This customer then sends me a purchase order, which I sign for a price of $50K. This purchase order shows the total amount of the order, but not he amount of pieces.
Since then, he has placed 5 orders of 50 pieces each (250 pcs total).
Now, he never sent payment or placed an order for those 500 pcs. He's called everytime, given me payment for 50 pcs and placed the order for 50 pcs.
Obviously, the price is different for 50 pcs, because it takes longer to make 50 pcs then 100 pcs (time per pc) and material prices have increased (we are now 10 months after his original order / purchase order). So for every piece in these orders, he has paid $55.00 per pc.
Its one thing if I quote a service for something and I myself delay manufacturing or installation, so then I have to deal with the increase in costs, but we never got paid for the original scope, so we never purchased that material, for example.
He now calls me saying that we have overcharged him in every order. I've explained to him that he ordered in small batches, not a bundle as quoted (actually invoiced) and that the material cost has increased. He believes that because I signed the Purchase Order we are bind to sell him these items for those prices.
My questions are:
1 - Do we have to sell for those prices? The Purchase order was for 500 pcs, so was the original invoice (which he never paid, instead placed small orders). Since he sent a PO for 500 pcs, that means technically he should have placed an order for 500 pcs correct? So these small orders technically do not match his original PO, and could be considered different orders, correct? (if he wants to get technical).
3 - I am myself not overly worried about this, I can take the easy way out with less headache and just make the remainder of the pieces for less money to have the final price be the same $50k. I'm not gonna lose that much in what the cost of the material is for me, but it is gonna cost me more in labor and reduce the profit on the material. I can see how I should've protected myself better, by perhaps not pricing by item, by writing "priced as a bundle", but ultimately, who is right and who is wrong?
Just to give an example, these are custom made items. Things that don't lose value as new, lets say like a metal chair. You can purchase the same chair today for $50, but next year, the same model, made later on, costs $60 because of the increase in costs.
If it also makes a difference, this took place in MA.
If I can clarify things better, let me know and I'll edit the question.
Please don't be harsh, I'm not a lawyer, I'm trying to learn to be able to back myself up better in the future.