I was fortunate enough last week on my trip to the West Coast to strike Greymouth on a brilliantly sunny April day. Wow, it felt like Maui and being cast in an original scene from “Hawaii Five O “. Over lunch I was half expecting to bump into Jack Lord. No I hadn’t consumed to much Cabbage Tree juice. A decaffeinated coffee and the warm West Coast Sunshine was enough to have me “wax lyrical” about the invigorating Coast.
What was I doing in Greymouth? Doing my best to impress on the good West Coast business folk the importance of operating in 2016 with up to date “Terms of Trade” documentation. The majority of my consultations this time in were with MTA assured motor mechanical workshops.
One garage in the quiet town of Ikamatua was one of several highlights of my trip. The team here had a few niggly debts and realised the financial benefits of being able to recover costs over and above the original debt from the debtor if their Terms of Trade had the respective up to date clauses. It was not only the extra money they could recoup from the debtor in the way of admin, legal fees that was enticing but also the ability to default their debtors in future with the correct paperwork disclosed.
All garages have their stories. When I asked about the older vehicles “out the back” gathering dust and the odd clump of green algae to the body. They remarked that although in their heyday they were once the “pride and joy” of several locals who regularly came to the garage for service and repair they were long abandoned by the owners in a tale that is all too familiar around the rural landscape. Yep! You’ve got it. The cost of vehicle repair outweighed the overall market value of the vehicle, and sadly, the owners never came back to pick up their vehicles and pay the garage for repair.
We discussed the options in this situation and all agreed that with” no correct paperwork you’re stuffed “. Here’s the bright light in the gloom. Providing the “Terms of Trade” documentation contained a clause called “Unpaid Seller’s rights” and the customer had accepted the garages “Terms of Trade” then the garage could legally sell the vehicles gathering dust to recover costs incurred as a result of vehicle repair. This key clause states that “Where the Customer has left any vehicle or item for repair, modification, exchange or for the Mechanic to perform any other services in relation to the vehicle and the Mechanic has not received or been tendered the whole of the price, or the payment has been dishonoured, The Mechanic shall have:
- A lien on the vehicle or item.
- The right to retain the vehicle or item for the price while the Mechanic is in possession of the vehicle.
- A right to sell the vehicle or item in accordance with the provisions of the Wages Protection and Contractor’s Lien Act, Repeal Act 1987 and may claim from the customer any monies that remain owing to the Mechanic after such disposal.
Brilliant! Just like the “Unpaid Seller’s rights” clause each of the separate clauses in the “Terms of Trade” document is designed to protect the business. Businesses, especially Mechanical repair workshops need clear policies with the customer on warranties, workmanship, defects and returns, intellectual property. And for goodness sake make sure you have a “Force Majeure” clause where neither party shall be liable for any default due to an act of God, war, terrorism, strike, lock-out, industrial action, fire, flood, drought, storm or any other event beyond the reasonable control of either party.
Congratulations to Agripro Mechanical. A small agricultural equipment & repair company in Kiata, Greymouth who had the vision last week to invest in robust “Terms of Trade” documentation specifically written to protect their business in 2016 and the years ahead.
In direct contrast the “wooden spoon” goes to a small Nelson engineering firm who thought they could google and download clauses and then cut and paste to present a professional document. “What a joke”! it was limp, ineffective and could not be governed by laws of New Zealand that are subject to the jurisdiction of the courts of New Zealand. The majority of clauses were from the U.S.A and Australia. Yet they only operated in New Zealand.
Think of “Terms of Trade” as a recipe guide for your business. Make sure the recipe has the right ingredients, has been tested, can be easily understood and once you get through to the taste test you’ll savour and enjoy the final result.
Nelson/ Blenheim and West Coast