Legal Question in Business Law in California

unwarranted mandate

a company that provides very senitive data to my company is now requiring me to provide an annual letter of assurance from an independant auditor that my company is in compliance with their principles. this is all at my expense and if i do not comply, all services will be terminated.

1) is this legal?

2) can a vendor mandate a subscriber to pay for something that benefits only the vendor at the subscribers expense?


Asked on 11/03/99, 7:00 pm

3 Answers from Attorneys

Ken Koury Kenneth P. Koury, Esq.

Re: unwarranted mandate

Yes, they can do that.

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Answered on 11/04/99, 12:32 pm
Thomas W. Newton Tims & Newton

Re: unwarranted mandate

Its difficult to give much of a response without

additional facts. From what you've said, the

practice may or may not be inappropriate.

Whether or not the company's demand is

"legal" most likely depends on the subscription

agreement and the nature of the information

being supplied.

I'd want to look at the subscription agreement

as a starting point. There may be language

in there that in fact binds you to provide proof

of compliance as partial consideration for

receipt of the data.

If you'd like, feel free to contact me with additional

information.

The foregoing information is provided as an

accommodation only, and does not constitute legal

advice or a legal opinion based on a comprehensive

review of all relevant facts, nor can provision of

such information be construed as creating an

attorney-client relationship.

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Answered on 11/03/99, 9:19 pm
Joshua Genser Joshua G. Genser, Attorney at Law

Re: unwarranted mandate

The relationship between your company and the vendor is governed by the contract between the two. That contract might be a single document, or it might be several documents, such as a collection of letters and memoranda back and forth, or it might even be no documents at all, and be established by oral agreement and by custom and practice. Whether this new demand by the vendor is a breach of the contract depends on the terms of the contract. Before any attorney can opine on that issue, he or she will have to review all potentially relevant documents and interview you.

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Answered on 11/04/99, 12:16 am


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