There is a widely held belief that when you give a client an estimate of the likely total cost of the project, you can’t end up charging any more than 10% above that estimate.
That is rubbish. But it pays to tread carefully when giving an estimate, so these are the rules you should follow.
For many years now, Madison Hardy has been providing legal advice to builders.
These days, hardly a week goes by when we do not receive a call from a builder who is at an emotional breaking-point over a dispute that has arisen with his client, and who tells us that in 20 (30, 40) years of building, he has never encountered as difficult a situation as the one he has contacted us about.
The leaky home crisis was the catalyst for most of the new building laws that have been introduced over the past decade.
Those reforms have largely stemmed from the Hunn Report of August 2002, which was a very good analysis of the state of the building industry at the time, and the factors that gave rise to leaky homes. However the one weakness of the Hunn Report was that it made a number of mistaken assumptions about the inadequacies of our justice system. The overall thrust of their conclusions was that homeowners were at a significant disadvantage when attempting to hold builders to account for shoddy workmanship, and that the power balance was very much in favour of the builder.
Competition amongst businesses is considered so beneficial to society that a whole Act of Parliament – the Commerce Act 1986 – is dedicated to ensuring that it continues unabated.
But the reality is that business profits would be a lot healthier, and businesses wouldn’t need to go to nearly as much effort, if their goods or services were in demand but they had a monopoly in their market. So for about as long as trade has existed, people have looked for ways to get rid of competition. The Commerce Act describes those as “restrictive trade practices” and it takes a very dim view of them.
In New Zealand, a National Consumer Survey conducted in 2009 found that two thirds of New Zealanders were not aware that they already have much the same rights (for free) under the Consumer Guarantees Act 1993.
The other day I bought a 22” LCD flat screen TV. The prices that were quoted by the major appliance retailers in Auckland for this particular model ranged from $399 to $499. The sales assistant didn’t mention any manufacturer’s warranty, but he asked me whether I wanted an extended warranty, which I declined. That’s because I already know what my rights are, and it’s easy for me to enforce them.
It happened when Levenes and Palmers Garden Centres went into receivership several years ago.
And it happened again when Whitcoulls and Borders were recently put into administration. People holding unredeemed gift tokens or vouchers (including my 11 year old daughter) were told that they would not be redeemed for their face value. The best they could do was buy a product for at least twice the face value of the token, and get a discount equivalent to that face value, with the rest of the price payable in cash. How is it that retailers can get away with this? What is the relevant law?
Limited liability was recognised in English law as early as the 1400s, but it was not until 1855 that the first Limited Liability Act was passed.
Traders weren’t prepared to embark on speculative ventures if they had to risk losing everything, including their personal assets, so this law gave them the protection they needed. If the company went bust, they didn’t have to pump in any more money than the amount they had originally invested or promised to invest.
In a previous newsletter I wrote about what happens when the warranty runs out.
I explained that a warranty is essentially a right to take something back if it breaks down, no questions asked, and have it repaired or get a new one. It is a common misconception that when a warranty expires, or when there is no warranty at all, then the customer has no rights. In fact, warranties are just additional or “bonus” rights, that run in parallel with the rights given to the customer by the law. The customer can enforce those underlying legal rights against the supplier regardless of whether there is a warranty or not.
When you think of a warranty, you think of something a retailer offers his customers when they buy a new car or washing machine.
That is, a right to take the thing back if it breaks down, no questions asked, and have it repaired or get a new one. This right usually only lasts for a specified period of say 2, 3 or 5 years. The car or washing machine usually breaks down the week after that period expires. But be that as it may.
There have been a number of high profile cases recently where New Zealand businesses have got into a scrap with another business over the name they choose to trade under.
A few years ago, the UK-based department store Harrods pressured a small New Zealand trader to stop carrying on business under the same name.
Then Pokeno-based lingerie retailer JenniferAnn.com had a similar run-in with a competitor over their use of confusingly similar names, and in 2005 Auckland fashion icon Trelise Cooper settled out of court with Arrowtown-based accessories seller Tamsin Cooper