Is it legal for a company to require that you pay them a fee before they will pay you for services and products that you provided them?
I live in Massachusetts and provide services for Simon Malls, they require that you pay into their "supplier qualification program" ( at $125 annually) or they will refuse to pay for products and services that you supplied.
They say this should be considered a cost of doing business on my part, and if they think that I am charging them back for the fee I will be punished.
Now, it seems, I can't raise my prices to coincide with the growing cost of my supplies and bills because if I do they will accuse me of violating this contract and I will loose future business with them.
I can't imagine doing this to one of my vendors ( "Thank you for the supplies, I'm going to keep them, but before I pay you you have to pay me $125") or getting away with it in a store: ( I'm going to take this merchandise home now; If you want me to pay you some time in the future, please pay me $125 first.)
Is this legal?
1 Answer from Attorneys
Simon Property Group are big league operators. They never lose an opportunity to charge a fee to tenants (I have represented a tenant group at a couple of their properties). If the account is worth it to you, then pay the fee, else you can decline. Nothing illegal about it -- they actually do due diligence on their vendors so an administrative charge is not without justification. No, it isn't nice.
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