Originally Posted by
Sy Reene
On the flip side, those same 400 are maybe wondering what the point was in giving Mike's the full selling price in advance, if it never even made it out of their shop and to Specialized.
That's not how it works. A customer's deposit becomes pre-paid income to the retail store. The money doesn't go to the supplier/manufacturer. Once the product is delivered to the retailer, the retailer must pay the supplier/manufacturer's invoice on the terms specified in the contract between the retailer and supplier/manufacturer.
The "order" is between the retail customer and Mike's. Mike's order is then placed with Specialized. When Mike's receives the product it ordered from Specialized, then it pays Specialized. When Mike's sells the product to its customer, then it collects its money from the customer. Deposits placed by the retail customer never becomes the property of the supplier/manufacture, and the supplier/manufacturer never receives that money.
If Specialized cancelled Mike's orders, it was likely because Mike's did something to breach its contract with Specialized. Since Mikes likely sold its business to PON in the form of an asset sale, Specialized probably had a right to cancel its contract with Mike's since the Mike's Bikes entity would no longer be in business. Mike's Bikes put itself in a position where it could not deliver on its promises to its customers. That is not Specialized's fault.