Legal Question in Business Law in California

disclosing profits

Is a business required to provide copies of vendor receipts to its client regarding equipment purchases for said client?

Is a business required to disclose it profits to the client?

Asked on 3/12/04, 2:11 pm

4 Answers from Attorneys

Ken Koenen Koenen & Tokunaga, P.C.
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Re: disclosing profits

When you go buy groceries or a new refrigerator, doe the retailer pull out their invoices and show them to you? That should answer your question.

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3/12/04, 2:33 pm
Edward Hoffman Law Offices of Edward A. Hoffman
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Re: disclosing profits

Businesses do not have to reveal their profits to their clients.

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3/12/04, 2:34 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law
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Re: disclosing profits

This can be a contentious subject, and I'd think it should depend upon the contract terms. For example, some U.S. government contracts allow the reseller a maximum percentage mark-up and they have the right to audit your books. This is a matter of contract, however, not statute (as far as I know). So, in a non-government reseller contract, I'd say read the contract terms carefully.

I know of at least one small-claims decision where a contractor wasn't required by the judge to reveal his material costs, even though his client and he had signed a cost-plus contract. I think the judge was wrong, because how the heck can the contractor prove what he's entitled to without evidence of cost?

Just goes to show that well-written contracts should specify the buyer's right to audit if that might become a bone of contention.

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3/12/04, 2:34 pm
E. Stassinos Elias Stassinos, Esq.
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Re: disclosing profits

Generally, you are not required to reveal the cost of items you purchase to resell.

However, it all depends on whether an explicit or implied agreement or contract existed between your company and the client and who the client is. If the client is the state or the U.S. government, different terms or law may apply.

Though matters that involve your legal question have not been codified, certain related matters may have been litigated at some point.

For this reason you may have to consult with an attorney for a more involved answer.

E. Stassinos, Esq.

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3/12/04, 4:41 pm

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