John King considers the disadvantages of buying through mail order

What do you do when the gas bill arrives? Do you forget about it until the red one follows on, and do you do this in order to imprive your own finances or just to be inconvenient to yet another monopoly?

But what do you think about companies who do similar things to you? As a hypothetical suggestion - consider a company which has produced a new and improved design of nutcracker. Research and development costs, as you can imagine, are high - and the sales volume is unpredictable.

In many such situations it is common practice to use a test-market to identify the probable sales and to find some of the more obvious design flaws. In markets such as our example there is more competitive pressure than usual so corners must be cut, quicker results are wanted and, above all, cash must be injected to finance yet more research.

An easy method of improving the cash flow position of a company is to either delay payments to suppliers or to get sales revenue in before delivery of the goods. From the proper accounting viewpoint this makes no difference to the real financial position - but this concerns the company less than their cash-flow. So you could find yourself drumming your fingers for some time while the company solves its cash-flow problems and makes your nutcracker.

So what can you do after you have sent in your order for a new nutcracker to the mail-order department of such a company? It largely depends on the exact wording both of the advertised offer, and rather more to the wording of the company's letter acknowledging your order. This particularly applies to any suggestion by them of unforeseen delays. The standard excuses includes:

"Demand has exceeded our wildest expectations..."

"We have been having problems with an outside supplier's quality control..."

"Too much vinegar on the chips" etc etc

Another reason that is usually a little better concealed is the existence of preferential customers, e.g. chain stores and other major outlets. This becomes particularly clear if ever the product hits the streets before all the mail-order customers have been cleared.

What can you do about it? Where it appears that the company has not been as straightforward as it might have been you can write and request them to pay you the interest on the money they are holding. This may seem a small sum at first, but don't forget how many others are in the same plight.

If a company were to sell a gadget for £200 and had a waiting list of 50,000 the cash involved is £10,000,000, the interest on this per day is £2,739.73 at ten per cent pa. So the manufacturer is not only improving its cash-flow but saving on paying overdraft interest of over £1,000,000 per year.

Moral pressure is much easier to exploit publicly via the media or an organised letter campaign. No company wants the sort of bad publicity such an attack would generate.

Some might try to float with the tide until the fuss died down (and the cash flow improved) but this is no good for the future image of a company, or for its future product launches.

There are various side-issues to this argument:

• Is there a discount to the mail-order purchasers?
• Is there any discount for long delays?
• Does the company otherwise give good service e.g. on faulty machines?
• If you get fed-up, is the company quick and helpful about repaying?
• Does the company allow partial deposits to secure a place in the queue once a long delay is obvious?
• Is the deposit money held in a special account? Should the company go bust, this helps you get your money back.
• Does the company give adequate reasons for any new delay?

On a more legal plane of discussion, the law of contract states that the contract between the buyer and the seller is made not, as you might think, by the purchaser agreeing to the price and conditions of the seller, but rather by the purchaser making an "offer to buy" and this then being accepted.

The situation in this nutcracker case may be that the company is later failing to abide by the terms of the contract.

The exact details of the law on mail-order requires very specialised knowledge, the exact analysis of any situation being subject to a variety of interpretations. But in any such case the bigger party must always be careful to avoid any impression of bullying. It is therefore an ideal target for various forms of moral pressure - in any case, this is preferable to any legal attack as the latter always works out much more expensive.