Markets: Open
Precious metals dealing involves fundamental market risks driven by commodity price volatility. The assets handled, whether highly refined bullion in the form of standardized coins or bars, or potentially semi-numismatic items, are subject to significant fluctuation based on global economic factors, demand, and general market sentiment. Given the unpredictable nature of precious metals prices, these transactions inherently involve a high degree of risk, a fact that is often mandated to be disclosed to consumers. Customers are expected to acknowledge that all risk related to the decline in market value of the precious metals rests with them, not the dealer.
A dealer such as Mendoza’s Precious Metals operates based on a narrow spread (markup) over the intrinsic or melt value, particularly for bullion which lacks significant numismatic value. This business model is predicated on the certainty of the transaction once a price is confirmed. When Mendoza’s Precious Metals issues an order number, the price is instantaneously “locked” based on the current market rate, creating a legally binding obligation for the buyer. This action simultaneously forces Mendoza’s Precious Metals into a financial commitment—either securing the physical metal or committing to a forward price. If the customer subsequently fails to fulfill the payment obligation, Mendoza’s Precious Metals is immediately exposed to the financial movement of the volatile underlying commodity. To mitigate this exposure, Mendoza’s Precious Metals must execute a mandatory, immediate offsetting transaction (liquidation) back into the market. The Market Loss Policy (MLP) is the contractual mechanism designed to ensure that the financial cost of this forced liquidation is recovered from the defaulting buyer.
The primary function of the MLP is to operate as a liquidated damages clause within the Terms and Conditions (T&C). It provides a standardized and predefined formula for calculating and recovering the dealer’s quantifiable losses resulting from the customer’s non-performance, whether through outright cancellation or non-payment. This recoverable loss includes the market shortfall—the difference between the locked purchase price and the subsequent offsetting sale price.
An equally crucial objective is the contractual establishment of the right of set-off. This provision acts as a powerful, accelerated self-help remedy. It legally entitles Mendoza’s Precious Metals to apply any customer funds or mutual debts currently in Mendoza’s Precious Metals’s possession—such as deposits, account balances, or credit card authorizations—directly toward satisfying the monetary obligations created by the MLP or other contractual breaches, significantly reducing the necessity for protracted and expensive litigation.
It is essential that the T&C explicitly address the disposition of Market Gain. If the customer cancels an order and the market price has risen, generating a surplus when Mendoza’s Precious Metals executes the offset sale, Mendoza’s Precious Metals must contractually reserve the right to retain all such gain. This provision serves to protect the integrity of the initial contract formation, removing the financial incentive for a customer to strategically default when the market moves favorably, only to re-buy at the new, lower confirmed price. By retaining the gain, Mendoza’s Precious Metals ensures that the customer remains financially bound to the price commitment made at the time of the order.
If Mendoza’s Precious Metals engages in the sale of potentially less liquid assets, such as semi-numismatic or highly specialized numismatic coins, the offset mechanism requires further definition. Unlike bullion, which can be rapidly offset based on widely published spot prices, the market depth for numismatics is significantly lower. Therefore, the T&C should clarify that the Offset Price used for calculating the market loss in such cases may be Mendoza’s Precious Metals’s internally determined current bid price for that specific non-bullion item, reflecting the realistic, lower liquidity valuation achievable upon prompt resale by the dealer.
For any legal or commercial agreement, particularly one involving complex financial obligations and remedies like set-off, the consistent and unambiguous identification of the parties is paramount. Therefore, Mendoza’s Precious Metals must be formally defined in a dedicated Definitions section at the beginning of the T&C. This practice ensures that throughout the document, the capitalized term consistently refers to the precise legal entity, Mendoza’s Precious Metals, its successors, and assigns.
Standard legal drafting protocols dictate that once a term is defined, such as “Mendoza’s Precious Metals” or “The Company,” that capitalized term should be used consistently throughout the body text without further modification. This consistency minimizes interpretive risks and maintains the professional integrity of the document.
The user’s explicit request to present the entity name “Mendoza’s Precious Metals” in bold font within the Market Loss Policy clause is likely motivated by a concern for visibility and ensuring the term is conspicuous, which is a core best practice for website terms and conditions involving limitations of liability or critical obligations. However, repeated use of bold font for a standard defined term throughout the contractual text is generally considered non-standard and can detract from the intended impact of truly critical, legally mandated emphasis points, such as key disclaimers or arbitration clauses.
To harmonize the user’s need for conspicuousness with professional legal drafting standards, the recommended approach involves two steps:
Formal Definition: Define the company fully, optionally using bold in the definition statement itself for initial emphasis (e.g., “Mendoza’s Precious Metals, hereinafter referred to as Mendoza’s Precious Metals or The Company”).
Section Emphasis: The highest degree of emphasis should be placed on the policy title itself. For example, the section dealing with the Market Loss Policy should be titled MARKET LOSS POLICY (MLP) in bold, all capital letters, ensuring maximum notice is given to the customer regarding this critical liability provision.
Once defined and the policy heading is emphasized, the body text should revert to using the consistently capitalized, non-bolded term “Mendoza’s Precious Metals” or “The Company,” ensuring clarity without sacrificing readability. Structural ambiguity is prevented by adhering to a strict definitional protocol where a term is defined once, preventing conflicting meanings that arise from defining a term implicitly in a clause while also formally defining it elsewhere.
The initial statement, “Upon issuance of an order number after a purchase from Mendoza’s Precious Metals, the price is guaranteed and cannot be cancelled,” is legally sound. This language establishes that a confirmed order constitutes a binding contract, locking the price and making any subsequent attempt to cancel an immediate breach of contract, or “Customer Default”.
To maximize Mendoza’s Precious Metals’s protection, the definition of “Order Cancellation” or “Customer Default” must be explicitly broad. It must cover not only the customer’s request to cancel but also functional failures of performance, such as:
Failure to submit payment within the specified time frame (e.g., five business days).
Refusal to accept the physical shipment upon delivery.
The most significant legal and commercial flaw in the original draft lies in the stipulated offset mechanism: “The transaction can solely be offset at Mendoza’s Precious Metals’s current asking price.” This is corrected to use the Bid Price to ensure the loss calculation accurately reflects the dealer’s verifiable commercial damage, supporting the clause as an enforceable liquidated damages provision.
The Market Loss is the quantifiable difference between the initial Confirmed Price and the Offset Price (Bid Price) realized by Mendoza’s Precious Metals at the moment of default. Any resulting Market Gain must explicitly be retained by Mendoza’s Precious Metals to remove the financial incentive for a customer to strategically default. The Offset Price (B) is fixed at the moment Mendoza’s Precious Metals is notified of the cancellation or declares the customer in default.
The contractual set-off provision is indispensable as it explicitly expands Mendoza’s Precious Metals’s rights beyond restricted common law limitations, providing clarity and certainty regarding application mechanisms and trigger situations. This language grants Mendoza’s Precious Metals the power to net its payment obligations to the customer against any debt the customer owes, providing a swift, self-help remedy. Furthermore, the T&C must explicitly state that transactions are intended to constitute “forward contracts” or “commodity contracts” as defined under the U.S. Bankruptcy Code to secure the set-off rights under “safe harbor” provisions, protecting them from the automatic stay provision.
The following sections comprise the final, integrated Terms and Conditions suitable for a professional precious metals dealer, incorporating all requested operational policies and necessary legal safeguards.
Price Lock and Non-Cancellability. Upon issuance of an Order Number after a purchase from Mendoza’s Precious Metals (the Company), the price for the Precious Metals is guaranteed, and the transaction constitutes a binding agreement that cannot be cancelled or rescinded by the Buyer without penalty.
Offset Mechanism and Market Loss. In the event of Order Cancellation or Customer Default (which includes, without limitation, non-payment or refusal of delivery), the transaction shall be solely offset at Mendoza’s Precious Metals’s current Bid Price or the then-current prevailing Spot Price. The Buyer is accountable for any resulting “Market Loss,” defined as the positive difference between the Confirmed Price and the Offset Price. Any Market Gain resulting from the offset shall vest in and remain the exclusive property of Mendoza’s Precious Metals.
Remedies and Application of Funds (Contractual Set-Off). Without restricting any other legal or equitable rights or remedies, Mendoza’s Precious Metals reserves the right, in its sole discretion, to apply any and all Buyer funds in its possession (including, but not limited to, deposits, credits, or charges to any payment method on file) to satisfy the Buyer’s Market Loss obligation. The Buyer agrees that all transactions involving Precious Metals are deemed “commodity contracts” for purposes of maximizing Mendoza’s Precious Metals‘s legal rights, including protection of set-off rights under the safe harbor provisions of the U.S. Bankruptcy Code.
We offer complimentary standard shipping on domestic orders totaling $199 or more; orders under this amount incur a $9.95 flat rate. All orders are shipped fully insured in discreet packaging. Risk of loss transfers from Mendoza’s Precious Metals to the Buyer immediately upon delivery confirmation by the carrier. Refusal of shipment constitutes Customer Default and triggers the Market Loss Policy.
Requests for refunds or exchanges must be made within five (5) business days of receiving your order and require prior approval. Returned items must be in original, undamaged, and resalable condition. The Buyer is responsible for the cost and risk of loss during return shipment. Due to market volatility, any approved refund or exchange that requires re-pricing of the metal will be subject to the Market Loss Policy (MLP): the Buyer must cover any Market Loss incurred due to price decline, while any Market Gain remains the exclusive property of Mendoza’s Precious Metals.
The Buyer acknowledges and agrees that the purchase and sale of precious metals, including bullion and numismatic coins, involves a high degree of risk. The value of precious metals fluctuates based on various market, economic, and geopolitical factors, and all risks related to the decline in the market value of the metals rest solely with the Buyer, not Mendoza’s Precious Metals. The Buyer affirms that they have made their own assessment of these risks and have sought independent investment advice as they deem necessary.
Mendoza’s Precious Metals guarantees that all precious metal products sold are genuine and consistent with the specifications provided at the time of purchase. However, all products are sold “as is.” Mendoza’s Precious Metals expressly disclaims any other warranties, whether express or implied, including, without limitation, any warranty of merchantability, or of fitness for a particular purpose.
In no event shall Mendoza’s Precious Metals be liable for any indirect, special, incidental, or consequential damages arising from the sale, use, or inability to use the products or services, even if advised of the possibility of such damages. The Buyer agrees that the total liability of Mendoza’s Precious Metals for any and all claims related to a specific transaction shall not exceed the total price paid by the Buyer for the specific product that gave rise to the claim.
These Terms and Conditions shall be governed by and construed in accordance with the laws of [Jurisdiction of Mendoza’s Precious Metals], without regard to its conflict of law principles. The Buyer irrevocably consents to the exclusive jurisdiction of the state and federal courts located in [Venue Location] for any action or dispute arising under these Terms.
Reservation of Rights. Mendoza’s Precious Metals reserves the right to refuse or cancel any order deemed questionable, suspicious, or of significant risk to the Company, regardless of the payment method or price confirmation.
Severability. If any provision of these Terms is deemed unlawful, void, or for any reason unenforceable, then that provision shall be deemed severable from these Terms and shall not affect the validity and enforceability of the remaining provisions.
Waiver. The failure of Mendoza’s Precious Metals to exercise any right or remedy shall not be construed as a waiver of that right or remedy. Any waiver must be in writing.
Amendments. Mendoza’s Precious Metals reserves the right to amend these Terms and Conditions at any time by posting the revised version on the website.