This is a commercial, not a consumer deal. So, the question is to ask what is commercially reasonable under the circumstances. Nobody is going to sue anybody over $700. But, SPG may simply write the $ off and determine that it won't deal with OP's company anymore or extract the amount through some other means.

Me, I wouldn't take the sales contact's word. Maybe the sales contact is just engaging in some CYA. I would speak with the next level up. If push comes to shove, I would likely authorize the $700 and expect a concession on the next event.