How do I make the right arrangements when commissioning work on my boat?
A quote is one thing and the amount on the bill is quite another, as Piet de Bruin found out after having his cabin re-upholstered. Josef Bruin thought that the interior of his boat was starting to look a bit bad and visited a yacht carpentry company to ask for a quote to re-carpet his cabin. The company sent Bruin a quote with a request to return it signed. The yacht company would paneling the cabin in teak; walls, cabinets, a bed with hatches and doors, ceiling and solid mouldings. The quotation did not contain a concrete amount but the statement that an hourly rate of € 40.00 would be used and that the work would be carried out on a time-and-expense basis (see box). The carpentry company had indicated verbally that the work would cost roughly € 4500.00 in labor and son € 1000.00 in material costs. Brown calculated that the work would be done for about €6,000 plus VAT. Brown drew white when he received the invoice: over € 10,000 (excluding VAT)!
This was not what he had expected based on what he had been told and he refused to pay the invoice. According to the yard, Bruin had ordered extra work that would have fallen outside the budget. Bruin could still agree with the comments regarding the additional work, but felt that this should not have been more than €1,000 extra, so that the total should amount to about €7,000 (plus VAT). The parties could not reach an agreement and Mr. Hommersom was asked for advice.
This contract is legally defined as ‘a contract for work’. If the price has not been determined at the time of concluding the contract, or only a recommended price has been determined, the client owes a reasonable price. If a recommended price has been given, it may not be exceeded by more than 10%, unless the contractor has warned the client in time for additional work not included in the quote. No specific amount had been agreed in the contract and the yard’s undertaking was oral. This was disputed, so the discussion focused on what would be a reasonable price in this case. The hourly specifications showed that the yard had put in a lot of hours. To have that sorted out in court, however, would be costly for de Bruin. The court would not pass judgment anyway without an expert’s opinion. The hourly reports did show that the yard had put in an awful lot of hours. However, legal proceedings would be very expensive for Bruin.
The court would not want to pass judgment without an expert’s opinion. Therefore, the proposal was made to the shipyard to jointly appoint an expert who would assess the positions of both parties as a binding advisor. (Binding in this case means that both parties declare in advance that they accept the outcome of the investigation).The expert examined the case and concluded that the yard had indeed charged too many hours. The invoice was not considered reasonable and had to be reduced by 25 percent. In this way, a substantive judgment was rendered without exposing Piet de Bruin to enormous costs and lengthy legal proceedings. Given the relatively minor importance, this was a solution he could live with.
Tip: When you enter into an agreement, make sure that a written budget is drawn up with a clear description and, if possible, a specific amount. Agree that additional work must first be approved by you in writing and record the financial consequences.
Directed: This term means that the contractor has the freedom to determine how the work will be carried out, particularly with regard to the time to be spent and that therefore usually no agreement on the maximum number of hours applies. On the other hand, there is a fixed contract price for the work and it will only be settled in respect of any additional or less work. Such a final agreement gives the client a much firmer grip on the budget and the costs, so that disappointments are avoided afterwards.
Many companies use (HISWA) general conditions. These include:
In the case of fixed contract prices, changes in taxes, excise duties and other similar charges may always be passed on. In the case of a fixed or variable contract, the proprietor may also pass on an increase or decrease in the price of a factor that affects the contract price (more than 3 months after conclusion of the contract) at the request of the first party to take action, provided that the work has not yet been completed. For example, government-imposed wage changes or a change in exchange rates. It is not permitted to increase the price of materials if the contractor could have ordered them earlier. If the total contract sum increases by more than 15%, you may dissolve the contract. The NJI Conditions for Consumers do not contain provisions about passing on interim price increases. Always check which conditions are used and you can of course negotiate with the contractor that these provisions do not apply.
(This is the relevant provision from the HISWA Conditions).
ARTICLE 5 – PRICE AND PRICE CHANGES.
Fixed purchase price/fixed contract price (1):
If the entrepreneur and the consumer have not explicitly agreed otherwise, the contract is subject to a fixed purchase price or a fixed contract price. The following provisions apply to this:
a. If the consumer asks the proprietor to do more, or other work than was agreed, the proprietor can increase the price. He can only do this if he has informed the consumer in time of the price increase or if the consumer could reasonably have foreseen the price increase.
b. The entrepreneur can always pass on changes in taxes, excise duties and other similar government levies to the consumer.
c. If the proprietor has to unexpectedly change or interrupt the work, he may charge for the extra costs resulting from this. He may only do this if the causes for the change or interruption cannot be attributed to him and he could not have foreseen them when he made the price agreement.
d. If the proprietor has to change or interrupt the work unexpectedly, or if the extent of the work turns out to be much greater than anticipated, the proprietor must stop the work immediately. He must then discuss with the consumer whether or not to continue the work and, if so, how. In any case, the entrepreneur is entitled to compensation for the work he has already done and for the costs associated with it.
e. If the contract includes additional agreements that have a special impact on the price, delivery time, sizes, weight and possibly engine power and speed, the entrepreneur must inform the consumer.
Variable purchase price/variable contract price (2):
If the entrepreneur and the consumer have agreed on a variable purchase price or variable contract sum, the following provisions apply:
a. If there is a price increase or decrease more than 3 months after entering into the agreement that affects the purchase price or contract price, the proprietor will pass this on. He does this at the request of the party with the greatest interest. The condition is that delivery has not yet taken place and/or the intended activities have not yet been carried out (in full).
b. However, the entrepreneur will not pass on a price increase if he could have prevented it by ordering in time. A price increase or decrease also includes a change in the currency used to pay for the supplied materials or products. This refers to a change in relation to the exchange rate used to calculate the original purchase price or contract price.
c. The proprietor can always pass on changes in taxes, excise duties and other similar government levies to the consumer.
d. If the proprietor encounters an increase or decrease in the wages, other employment conditions or social security premiums of his employees more than 3 months after concluding the contract, he may pass this on. The condition is that it concerns a wage increase or decrease that is imposed by the collective agreement or wage regulation to which the entrepreneur is bound and/or that it concerns social premiums that are at his expense. Another condition is that the change affects the contract sum.
e. If the price increases mentioned in this paragraph increase the purchase price or contract price by more than 15%, the consumer may terminate the purchase agreement.
Specialized in water sports: Frits Hommersom. Frits Hommersom can be reached at www.hommersomadvocatuur.nl (https://www.stegfunk.de/recht-kolumne-auftraege-vergeben/)