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EDITORIAL<\/strong><\/p>\n I wonder just how many agents that signed Consolidated Asset Recoveries newest contract knew what the definition of \u201cMost Favoured Nation\u201d (MFN) was when they signed it? One agency about to sign it did and shared a copy with me. It\u2019s not the only clause that\u2019s a cause for alarm, there is also a right to an onsite records audit to assure it\u2019s enforcement.<\/p>\n I AM NOT AN ATTORNEY! Nor am I in the position to or am I dispensing legal advice.<\/strong> But even as a layman, this doesn\u2019t smell right. Read the definition of an MFN clause below.<\/p>\n According to Westlaw<\/a>, \u201cA <\/em>contractual provision, also known as a “most-favored-customer clause,<\/strong>” “prudent buyer clause” or “non-discrimination clause,” in which the seller promises the buyer that it will not offer another buyer better terms before offering those terms or better terms to the first buyer. Because of antitrust concerns that this practice may be used in an anticompetitive manner, courts will examine these provisions closely using a <\/em>rule of reason<\/em><\/strong><\/a> analysis. Courts will determine the enforceability of the MFN provision by balancing the pro-competitive benefits of the provision (such as cost savings for buyers that may be passed on to downstream buyers) against the anticompetitive harms (such as discouraging price cutting and potentially encouraging <\/em>monopolies<\/em><\/strong><\/a>)<\/em>.\u201d<\/p>\n To put this simply, if an agency has lenders or forwarders who they work for and only charge $275, they would then have to give up their contract rate of $300 for $275 to Consolidated Asset Recovery.<\/p>\n But back to the actual definition. Anticompetitive harms and monopolies? In the repossession industry, really? In the world where repossession fees have been stagnant since the 80\u2019s, I\u2019d like to see that hold up in court.<\/p>\n I just don\u2019t see how that is applicable. If the concern is it\u2019s pass through to the consumer as the affected party, then in reality, the consumer has by all rights, been unaffected for almost 40 YEARS!<\/p>\n For the record, here\u2019s what\u2019s in the contract copy I was provided:<\/p>\n Page 5, section 3, Item g.<\/strong> – Most-Favored Nation<\/strong>.\u00a0 CONTRACTOR warrants that all of the prices, benefits and terms provided by CONTRACTOR for the Services are at least as favorable as the prices, benefits and terms provided by CONTRACTOR to any other person or entity having a business model comparable to CONSOLIDATED and offering contractual requirements to CONTRACTOR that are similar to those offered by CONSOLIDATED (a \u201cComparable Vendor\u201d) for similar services.\u00a0 Should CONTRACTOR enter into any subsequent agreement with a Comparable Vendor that provides pricing, benefits or terms that are more favorable than those contained in this Agreement, CONTRACTOR agrees to amend this Agreement to provide CONSOLIDATED the more favorable pricing, benefits or terms\u00a0 effective as of the date of such other agreement.\u00a0 CONTRACTOR shall notify CONSOLIDATED no later than fifteen (15) days after CONTRACTOR enters into any such other more favorable agreement.\u00a0 <\/em><\/p>\n Lot inspections, I get it. Background checks. I get it. In fact, I think they are fairly reasonable from a compliance standpoint, but to require you to allow them access to your records requiring no cause, other than their own suspicion or desire to do so, is pretty invasive if you ask me. Regardless, sometimes I can\u2019t believe the terms you folks agree to. You\u2019re killing yourselves and each other. But hey, I don\u2019t run your business.<\/p>\n Page 8, section 7 – Audit Rights. <\/strong>Upon thirty (30) days\u2019 notice to CONTRACTOR, CONSOLIDATED shall have the right to examine the records of CONTRACTOR to verify CONTRACTOR\u2019s compliance with the terms of this Agreement.\u00a0 CONTRACTOR will make such records as are identified by CONSOLIDATED available during normal business hours at the facility where such records are maintained.\u00a0 <\/strong><\/p>\n No cause, no conditions, just an open ended authority granted for $300 contingent per unit recovered. Why would anyone sign this?<\/p>\n![\"\"](\"http:\/\/blog.cucollector.com\/wp-content\/uploads\/2018\/04\/terms_cndtns-300x168.jpg\")
Adding insult to injury, the contract also authorizes them to come into your office (with a 30 day notice) and audit your records to assure that you are in compliance with their other onerous and draconian clause.<\/p>\n
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This is a new one in this industry. I haven\u2019t heard of any other forwarder or lender doing this before and I checked with one forwarder that told me he\u2019d never seen one in this industry either. This seems like the opposite of price fixing. It looks like price compression on an already compressed market.<\/p>\n