Pharmacy sales – dispensing with stock valuation disputes

17 October, 2017

Disputes about stock valuations following a pharmacy sale are relatively common, despite the fact that the valuation is usually said to be binding on the parties unless there has been a serious error or fraud. Having advised on pharmacy stock valuation disputes recently, I’ve prepared my top ten tips on arranging a valuation to avoid disputes which you can read here.

In my experience, the key to avoiding disputes is for the buyer to carefully review the stock in advance and to ask for an indication of the stock value for budgeting purposes so that the valuation doesn’t come as a nasty surprise. Buyers are often unaware that they have an opportunity before they purchase to ask for certain stock to be excluded from the sale altogether or to negotiate discounts for certain items. This would be advisable for excessive stock that might be unsaleable, left over seasonal stock, obsolete or slow moving items or wholesale stock which the buyer may not want at all. If these sort of discussions take place before the sale, there is less chance of a buyer seeking to challenge the valuation if they think it’s too high and doesn’t reflect the saleability of the stock.

All too often the seller takes charge with instructing the valuer as they’re keen to get paid for the stock leaving the buyer in the dark as to what instructions the valuer has received. It’s actually in the interest of the seller to involve the buyer at all stages because if the buyer later alleges that there has been a manifest error in the stock-take method, there is likely to be a delay in the seller getting paid until the dispute is resolved and this will usually involve a negotiation of the amount to be paid and both parties incurring legal costs. If both parties are fully involved in the selection and instruction of the valuer this helps ensure that the valuer has the right credentials, experience and impartiality and that they’re given the correct instructions. The parties should both try and attend the stock-take to see how it’s being done and to ask or answer any questions of the valuer – this way there’s less scope for either party to argue that the valuation method was flawed.