This new batch they ordered, the issue was addressed. Parts made, parts delivered, parts accepted, parts rejected out of fear these would also fail. Come to find out, after all these years, they want a 1/4" fillet around the joint... fillet weld symbol is on the drawing without filler size call out, no weld process or filler metal call out on drawing in the fish tail of weld symbol. The engineer has no clue what process is to be performed, they just want a 1/4 fillet around joint... ok. I request an updated drawing with a weld process call out. Crickets.
Next day, we have a meeting, QC/Purchaser/QC director and an engineer. I address the issues the part failed from and let them know I was confident I could re-work them and or replace them with a new FAI report. I offered them a vast array of solutions without excuses. They agree to it. 2 days later, their customer cancels the entire order over $35K worth of parts and my customer is now requesting a credit memo for this job this.
Clarity on the timeline is important in this scenario. It sounds like the customer found an issue in one lot (was that lot paid for already?).
They then ordered a new lot (replacement for the prior or brand new order?). You built and delivered that lot and it was accepted. Subsequently they decided they want to change the design of the part or did they identify that the parts didn’t meet print at that time?
Details of the sequence matters a lot. If they ordered new parts after the failure without requesting any design changes or you fully implemented any changes and you delivered the parts, they would be responsible for paying.
Because you delivered the parts, it doesn’t seem like this is a case of a canceled order. This seems like the case of a rejected order. Do any of your contracts provide any clarification on how to treat rejected orders? Is there a specific window of time for them to reject? Now you might be in a problem because you agreed to receive the parts back.
There are lot of moving pieces in this scenario. If you detail out the full sequence of events and it is clear that the customer ordered the parts in bad faith, ie not clarifying design requirements after knowing about a potential issue. Now that timeline may also identify that you made guarantees that removed their responsibility. This is all more complex with the middleman involved.
The best case scenario is that you can write a clear letter that explains why they are responsible for the paying the cost of the parts. That might get some traction.
I have been on the other side of this with a vendor demanding payment for defective parts on a time and material build. I had actually been at their site and identified equipment running out of spec. I contacted the equipment manufacture who informed me they had previously told the vendor to not run the equipment in that condition. So pretty simple case. Vendor was holding some of our own equipment hostage. It cost $35k in lawyering to get out a $140k bill. $8k more extracted $43k to cover our legal fees. I had reasonably sound contracts to cover who was responsible for what and it still was a huge time sucking cluster.
