It often happens that a discussion arises between the client and the yard/repairer about the amount of the invoice. Perhaps an amount was once agreed for a refit, but then additional work was carried out and the client ends up paying significantly more and refuses to pay. Or a client may think they have had a casual chat with the repairer about a complaint and ask ‘to have a look at it’, whereupon payment for the repair is refused because, in their belief, the client never gave the order.
An example: Yachtservice X receives a visit from Mr. Y who notices complaints about the engine of his raft and then has it examined. X then offers the engine to the importer, without consultation. The fuel injectors turned out to be defective. The importer repaired the engine, again without consultation and therefore without stating the costs, and sent it back to Yachtservice X. The latter invoiced Mr. Y with the work charged to him, plus some additional work. In total, approximately 5,000 euros. Mr Y refuses to pay, because he hadn’t ordered any repairs at all, only an inspection. Tricky!
There is indeed no order nor order confirmation. Nor is there an estimate of the expected costs of the repair. Yachtservice X is not much to blame either, because he in turn was presented with a fait accompli by the importer. However, Y did take his punt with him and also benefited from the repair. After all, the engine works again. He also knows that it has been repaired.
Compromise after discussion.
In the discussion that follows, Y argues that if he had known that the repair would be so expensive, he would never have ordered it. Moreover, he argued that the repair was not necessarily necessary and could have been done in another way.
Yachtservice X, however, claims that the repairs are necessary and also disputes that it could have been done cheaper elsewhere. He also moderated his hours in the meantime.
Eventually Y realizes that he does benefit from the repairs. He calculates this benefit at about half of the total invoice, whatever amount he pays. A compromise in which at least the repairer still gets paid something, although X has to pay significantly more to the importer and therefore actually suffers a loss. However, litigation is of little use to him, because there is no evidence of an order for repair and there is no quotation. The repairer takes his loss, under the motto ‘better half an egg than an empty shell’.
Customer not always king.
In this case, the amount at stake is relatively small and the case is solved pragmatically. However, if a larger interest had been at stake, the case could have turned out very differently. After all, if X had summoned Y to pay, it is to be expected that Y would not have got off so easy on his own calculation. After all, he has been ‘enriched’ by the repair and has therefore ‘impoverished’ X. In such proceedings it is usual that the court appoints an expert, who calculates what a reasonable price is and Y has to pay it anyway, regardless of his own opinion. Then he should not have taken the ship.
Additional work is disputed.
What if there is no difference between the parties regarding an order for a refit, for example, but the work turns out to be much more expensive? It is important to note that the law on contracting work stipulates that if the price has not been determined at the time of concluding the contract or if only a guide price has been set, the client owes a reasonable price. The prices usually charged by the contractor and any expectations aroused are taken into account.
Where a guide price does have been set, it may not be exceeded by more than ten percent unless the contractor has given timely warning. Here too, the discussion usually focuses on whether more work has therefore been carried out or whether, for example, the work requires much more time/effort than the contractor initially calculated. If more work has been carried out or other materials are used, the discussion often revolves around the fact that the client disputes having given the order for this or puts forward as a defense that he did not know that the more work/materials would cost extra.
Although in this case the law partially protects both the client and the contractor by means of the aforementioned ceiling, it happens all too often that a project ends up much higher in terms of exceeding the aforementioned ten percent. If the shipyard/repairer cannot prove that either the principal gave the order or that he had been warned that the budget was likely to be exceeded, he runs a great risk! It has been shown in legal proceedings with the help of an expert that it was still reasonable for a shipyard to be compensated for the fact that a ship was delivered with a much higher value than according to the original offer, but this required years of expensive proceedings.
A practical solution to prevent escalations is to maintain a tight discipline in documenting all work that deviates from the original quote/agreement. Of course, this is not always practical, but if, for example, at the end of a working day the performers indicate that water has been done contrary to what was agreed and this is also confirmed, even if only by e-mail, to the client with the financial consequences, there is little or no risk that the efforts will not be paid.
Good to remember that a verbal agreement/assignment is just as valid as a written one, but then there must be proof that it was given, which in practice can only be done by witnesses or as soon as possible confirming a verbal assignment to the client, for example by mail.