Taiwanese server dealer Wiwynn is suing X for at least $61 million of unpaid IT infrastructure products, alleging Breach of Contract, Promissory Estoppel, and Breach of the Covenant of Good Faith and Fair Dealing. Then, according to The Register, the plaintiff amended its complaint, adding Intentional Misrepresentation and Negligent Misrepresentation to its case.
The story behind the case is that pre-Musk, Twitter contracted the company Wiwynn to deliver “unique, custom-designed IT infrastructure products, including rack solutions.” However, since these were bespoke items, the company had to order their components way in advance. According to the complaint, “The components used to build the products are largely unique to the products, resulting in long lead times for ordering such component parts from suppliers,” and Twitter must give “written approval for Wiwynn to purchase the necessary components to manufacture the customer products…and expressly assumed liabilities for the procurement costs.”
But when Musk took over Twitter and renamed it X, Wiwynn’s arrangement with the social media platform fell apart. X has started to default on its bill for the products that the server dealer ordered; furthermore, the company alleges that X did not respond to its inquiries for its past-due balances.
It says that X is on the hook for over $32 million worth of IT infrastructure and server products, plus it has already paid other suppliers in advance to procure components, which X hasn’t paid for yet. While Wiwynn says it could sell some of the parts it ordered, it claims that Musk still owes it at least $61 million for these server items.
However, X said it did not breach any contract with Wiwynn and that the social media platform had not made any firm purchase order when the server dealer went ahead with its purchases and deliveries. Aside from that, X hasn’t made any comment about the case that is currently being heard in the U.S. District Court for the Northern District of California.
This case is just one of the many legal issues hounding X. But with Elon’s resources, this is more likely an issue of principle rather than cost. Nevertheless, all we can do is follow the case to see which way the court or jury goes or if one or the other will settle out of court.