A business/ethics question for builders

[MANNDOLINS]

I've had this happen a couple times this year.. I get an order, receive deposit, build instrument in time for scheduled delivery and then wait months for customer to pay balance. Just wondering if any other builders have experienced this conundrum and if so what do you think is a reasonable timeline for holding the instrument? last time I held finished instrument for 2 months...this time it's right at 2 months also..with no response to emails...

[kkmm]

I am no luthier or build anything for money. I think this is just a contract and there got to me some statement such as:

"after the customer is notified that the instrument is ready, he will have to pay the balance and pickup the instrument within 2 or 3 months (or whatever time frame that is reasonable)". Failure to do so will result in forfeiting the deposit and the instrument"

And to make sure this works, the deposit should be a significant percentage (30% to 40%) of the price you charge the customer/

The same thing with repairing instrument, the customer MUST pickup the instrument after a certain time (3 months) or else the customer is giving that up for free.

This kind of arrangement (or rules) appears to be common practice in other business (cloth cleaning for example).

[Jim Garber]

I assume that you contact the buyer at least a few weeks to a month before the instrument is ready? If you are in consistent communication with the buyer then the burden is on him or her. I would think, depending on your time frame maybe they forgot and then needed to scramble for the cash.

Another possibility is to ask for, say, 1/3 deposit, 1/3 near completion and 1/3 on or before delivery.

[pops1]

I had a customer pick up a guitar after repairs were done 3 years ago. Several contacts, several promises. I didn't feel right doing anything else, tho I threaten to sell it for repair costs, I wouldn't have done it. It's not fair, but I am not sure what else to do. Once he picked it up he was very happy, I don't get it. This will be an interesting thread.

[MANNDOLINS]

I think I do pretty good at updating customers as the build progresses..and always send pics when it's time to stain..to double check color choices..then again when finish is complete..this is when I send final bills... about 2-3 weeks before ready.
I realize stuff happens..and one can get caught short financially, etc..and I can work with that...but when comunication ends?
I guess I need to give them a "deadline" to respond?

[colorado_al]

I'd send then a certified, return receipt, letter telling them you need the final payment by 15 days following receipt of the letter. If not, they forfeit the deposit and you are free to sell the instrument to another buyer.
Also, I was checking out your site. I think you ought to charge more up front. Sounds like you have quite a wait list. Your instruments are high quality and in demand. If I were you, I'd ask for 1/2 up front and 1/2 on completion.

[Ron McMillan]

That kind of treatment by customers is unforgivable (unless, at the very least, they provide a solid excuse for requesting time to get together the money). My one bad experience was in the other direction, when a well-known luthier shipped an instrument that was a different colour than the one I ordered. He clearly hoped that I would accept it without complaint, but when I did complain he begged for time to make a new one. He then proceeded to keep me waiting for three years. That was bad enough, but when I received the replacement it was poorly finished and unplayable; whatsmore he told me he was 'done with it', as if the delay was all my fault. I had to spend time and my own money getting a brand new custom instrument to a playable condition.

For the record: the luthier concerned was not Mr Mann.

[nkforster]

Another possibility is to ask for, say, 1/3 deposit, 1/3 near completion and 1/3 on or before delivery.

You can still find yourself in the same position though Jim, and because the customer has paid 2/3 up front, that makes you even more the bad guy if you sell the instrument to someone else when the final 1/3 doesn't come.

Too high a deposit can put folk off ordering. And I've seen a few makers taking too much money before delivery and spending it before they had done the work. It's a tricky thing to negotiate.

First thing is to never send an instrument until it's been paid for. I think most of us would agree on that one. But what to do when someone won't settle up and won't communicate? I would imagine every country has it's own legal position on this, but in reality this is a negotiation between two people, both of whom often don't have the funds to engage legal services - especially if the two parties are in different countries.

This year I found myself waiting for three customers to pay up when the work was complete. One I'm still waiting - he's a month late, and that's fine. But two both developed financial problems after ordering. In neither case was it their fault they couldn't pay, but in both cases I was stuck with their instruments. Both went quiet on me for a while until I made it clear I wasn't angry with them, I just needed to confirm they couldn't pay. And yes, I wrote and informed them I considered it a "cancelled order", and they lost their deposits. Neither complained actually I got the impression both were rather relieved.

My suggestion is this - do see what the legal position is - then set a deadline, after which time you sell it.

[Stephen Perry]

Sales of goods. Look to your contract and the UCC. nkforster experienced what generally happens. Things change with time.

[fscotte]

Why not just put it up for sale, and return the money to the original depositor when it sells? Its a win win for you. If he contacts you, then get the remainder of the money he owes and its his. If he doesnt contact you, then the instrument remains on the sale block until someone else buys it.

Never ever keep a deposit. Its not ethically right and may be illegal without signed contracts. He may be in the hospital, had a stroke or injured, or even dead.

I understand that this is a business for some folks but we sell mandolins, we aren't concrete guys and we aren't roofers, Etc no disparaging those guys... but this is a very intimate business with good relations generally between players, sellers, buyers, builders, ethics play a part here. Generally we're a big family and we all love the same thing. I don't think it's right or couth to keep someone's deposit just because they changed their mind. You still have the entire instrument and you can sell it to someone else.

[Jeff Mando]

Obviously something happened in the purchaser's financial situation between the time of ordering and pickup. Kind of an age-old problem -- getting people without money to pay up. More than likely they would love to own the mandolin, but have more pressing needs at the current time. Sometimes lack of communication is due to embarrassment.

[thistle3585]

Put payment terms in the contract but select terms that you are willing to enforce and not just use to threaten someone. That includes a process to handle non-payment. What I have done in the past is to give them two weeks to make payment, if they don't I notify them they have a week to make payment or they forfeit their deposit and I'll put the instrument up for sale. They are free to buy the instrument once I list it publicly after that but I will no longer hold it. If they are communicating with me then I'll make payment arrangements. I realize life sometimes gets in the way but if they are ignoring me then I'll just sell it to someone else. This is another reason I quit taking orders, but this is a hobby to me and I know its your livelihood. I've had people ask to make payments on an instrument over an extended time, but I don't like those types of arrangements. They haven't ended well.

[Steve Ostrander]

I'm not a lawyer, nor have I played one on TV, but I think it's fair to sell the instrument after a certain period of time, which should be agreed upon in the build contract, and after a good faith effort to contact the customer, unless other arrangements are agreed to by the two parties. Unfortunately, a customer's financial situation can change during the build period--and so can the builders.

An unpaid repair bill seems like a different situation to me, because the customer already owns the instrument. With a build, the customer doesn't actually own the instrument yet--even if they have paid a deposit. I'm not saying it's right for them to delay payment, and I understand that the luthier is storing the instrument for them. I don't know how long or at what point the property is considered abandoned. I'm sure others here know much more about that than I.

[Willie Poole]

I guess this problem has caused a lot of builders to just sell through dealers, make an instrument and have dealers sell them for you, no direct sales or "special orders"...

[Ted Eschliman]

Cover your bases. Send a registered letter outlining your intentions, and don't be afraid to be harsher in writing than you will be in the end. Give a hard deadline, cover with an unspoken limited grace period. The registered letter implies a higher level of seriousness on your part, plus offers tangible proof of correspondence an email could never offer.

You really can't depend on email. Sometimes addresses go away, and even when they don't, they make inaction easy to hide.

Despite signage in our repair shop (and claim tags) that "All unclaimed repairs will be sold for the cost of the repairs after 30 days," we still have a handful of these to deal with every year. We rarely do have to sell an instrument for this reason, but we do send out registered letters when necessary.

[MikeEdgerton]

....An unpaid repair bill seems like a different situation to me, because the customer already owns the instrument. ...

Actually an unpaid repair bill has a whole lot of legal precedent. Try taking your car in for repairs and not paying for it. Most states have laws that allow the garage to sell the car for the cost of the repair after a set amount of time and notification. In New Jersey I believe it's called a Garage keepers Lien. That same law allowed me to dispose of product owned by people that didn't pay their public warehousing bills to cover my cost of storing their product. I'm sure the same sort of laws would be applicable in most states and I'm also sure there is a process you must go through before doing it. I do agree with Ted, cover your bases. Spending some money on a lawyer to write up a contract that you can use each time you contract for a build is money well spent in the end. Hope for the best but plan for the worst.

[Jen88]

Surely a deposit is to protect the builder to some extent, if the buyer doesn't come through.

I don't think you should have to give it back to the prospective buyer if they don't communicate with you.

If they come back to you then you may choose to do this on a case by case basis, but I don't think that should be the default. Otherwise what's the point in deposits?

If they have had something terrible happen to them, then it seems that they may not be in a position to communicate with you at this time, so I think you should give them a deadline then put the instrument up for sale.

You still have to eat etc after all, just as they do.

If they come back to you before it's been sold and still want to buy it then you can choose to sell it to them.

Cheers,
Jen.

[Folkmusician.com]

I still have an unclaimed mandolin that was repaired over 2 years ago. I last heard from the owner a little over a 18 months ago. It is really tough, because, the last thing I want to do is sell off this person's mandolin. The bill is sizable, but the mandolin is well worth 3X the repair bill. At this point, I have not made any formal move and this leaves me liable for it. I feel like the bad guy for even thinking of a lean sale on it. Of course, if I don't, what happens 10 years down the road. The reality is, I need to get this started even if I don't intend to dispose of the instrument.

Maybe the same would apply to a new build? Start the process to protect yourself. Give the customer every opportunity to finalize the purchase, but in the meantime, continue forward with the official notice that the instrument will be sold and the deposit forfeited, should the purchase not be completed by the stated date. Personally, I would hold the instrument past the stated date if the customer was still interested, and I would also be inclined to refund the deposit, though this is a personal choice. I would feel comfortable, holding the deposit until the instrument sold, and then refunding.

[Bill Snyder]

While I might not keep any of the deposit if I were able to sell it to someone else I think it is reasonable to. If this is a VERY CUSTOM instrument that makes getting fair value for it difficult if sold to someone else it definitely makes sense to hold back the deposit IMHO.

[Tom C]

It's a new unpaid for mando so person does not own it yet. Sell the mando and return the deposit. It's the same thing you would (should) do if you delivered the mando after getting paid, but the buyer decided it was not up to par or just not for them. But you return deposit (since that's all you took) after you sell it to somebody else.

[nkforster]

It's a new unpaid for mando so person does not own it yet. Sell the mando and return the deposit. It's the same thing you would (should) do if you delivered the mando after getting paid, but the buyer decided it was not up to par or just not for them. But you return deposit (since that's all you took) after you sell it to somebody else.

I'm not sure it's fair that those who order instruments and then don't pay for them should be automatically given their deposits back when an instrument is sold to someone else. This doesn't take into account the amount of time that customer may have taken up in the design process nor the stress to the maker in having to chase someone up who isn't honouring their side of the deal. It's up to each individual, but what you're suggesting could leave makers open to all sorts of tricks and games.

A deposit is a token of commitment. It rarely covers the materials used and never covers the time taken.

[MANNDOLINS]

Thanks for all the input folks..interestingly I received an email from customer today..and we are working it out..
Lots of good suggestions though..I want to stress that 99.9% of my customers have been awsome and I'm constantly amazed at how many trusting souls order instruments sight unseen ..(and not held in their hand). I feel like the relationship between a builder and customer is all about trust..they trust me with their money and that I will deliver a quality product within a scheduled time frame ..and I trust them to follow through with the purchase (and not cancel a custom order half way through build .) things happen from time to time but so far nothing that couldn't be solved with just an honest conversation...never felt the need for a contract..and hope I never do..I guess when/if that time comes I'll probably stop taking orders to ..and just build spec instruments..

[jesserules]

I think I do pretty good at updating customers as the build progresses..and always send pics when it's time to stain..to double check color choices..then again when finish is complete..this is when I send final bills... about 2-3 weeks before ready.
I realize stuff happens..and one can get caught short financially, etc..and I can work with that...but when comunication ends?
I guess I need to give them a "deadline" to respond?

I ordered a custom instrument from Jonathan Mann a couple of years ago. It's an outstanding beautiful instrument that I'm very happy with. Jonathan absolutely did an excellent job of keeping me informed, worked with me on getting just the color I wanted, and sent me periodic emails with photos of the manndolin as it progressed.

"Pretty good at updating customers" is being very modest!

[Barry Wilson]

I have been looking at John's site a lot in the last couple months. I have to pay off another build first

[Ivan Kelsall]

Having read Jonathan's post,i think that it's more of an ethics problem for the customer. Jonathan has completed his part of the deal & it's the customer who's defaulting on it's completion.

I agree with Ted Eschliman & Mike Edgerton that a well defined contract requires drawing up stating the customer's obligations on completion of an order & what they can expect if they default on the final payment. The only exceptions i'd make personally are if the customer has ''honestly'' run into financial difficulties. In that case i'd maybe extend the final payment date. If no further payment is forthcoming over a given period stated in the contract,then the instrument should be sold.
If the instrument makes the expected profit from the sale,then the original customer's deposit could be returned,although some builders do state that the deposit will be forfeit if the customer doesn't pay up.

It's not a nice situation for any builder to be in,
Ivan