These disagreements result from ambiguities in contracts or failure to document client requests for additional work. Contracts are negotiated by project managers and are usually informal memoranda of agreement. Although disputes have been resolved through negotiation, these conditions are fertile ground for litigation. This example problem continues the advisory comment for Rotomotor. A sample of 100 entries in the Sales Returns and Allowances Account showed that 73 were due to shipping errors of rush orders.
Clients are especially sensitive to the quality of service for rush orders.
As a customer incentive in a highly competitive market, Rotomotor has a goal of outstanding customer service. Shipping errors conflict with this goal. For rush orders, the salesperson phones the order to the Order Department. The Order Department clerk checks the credit standing of the customer and phones the order to Shipping. Incorrect information transmitted by the salesperson. .