Question
Let's say that you have a cabinet job that is not going as well as it should. In fact, let's say that delays have occurred, design issues have surfaced, whatever. Let's say that communications between the homeowner and the contractor have deteriorated to the point that that no one is happy and the job has come to a standstill. Let's take it a step further and say that the homeowner has demanded that you remove your cabinets and reimburse them all of the money they have paid.
In other words, there appears to be no compromise. As the contractor, what would you do? Would you uninstall the cabinets? Would you reimburse all of the money? I'm curious as to how different sized shops would respond to this scenario. Of course, good business sense suggests that you would find some meeting ground and work out a solution. In the absence of that common ground, would you leave what was installed or would you take it out?
Forum Responses
(Business and Management Forum)
From contributor K:
There are so many variables to this hypothetical...
1. Was there a contract? If so, were the design details laid out explicitly, and drawings provided and signed off on? Were samples provided and signed off on prior to fabrication? Were the cabinets inspected prior to delivery or unloaded from the truck?
2. What exactly is the design complaint? If the homeowner is happy with the cabinets themselves, and just not happy with the design, there is where your compromise would more than likely be found. They pay for remake at a reduced rate, and you install for a reduced rate (not for free). This assumes they signed off on the design and samples.
3. Are you the contractor who installed these cabs, or did you provide them to the contractor for installation?
4. Are these custom cabinets or stock? Is this defined in your contract, and noted that there are no returns due to the nature of custom cabinets?
5. How long were the delays? Delays are always a factor, and are affected by a wide variety of factors, so just because there was a delay, if it was reasonable in nature, doesn't mean that the cabinets come off the wall.
6. At what point did the customer become unhappy with the cabinets? Before or after they were installed?
1. No contract was provided since the customer is a friend of a friend. Detailed drawings were provided as well as samples to include finish samples. Since I want to direct this thread toward the smaller shop to illustrate the pitfalls of a small shop, let's say that the job is not finished because all of the cabinets are not ready to be installed.
2. Let's say that the design issue is a work in progress. Too many times, I've seen/heard cabinetmakers working on the fly in order to satisfy their client. So, although drawings were provided and approved, as the work progressed, the homeowner made changes to boxes and not to the layout, which contributed to delays. As far as quality is concerned, the cabinetmaker is building custom cabinets designed for the spaces provided to a normal industry standard. Box changes include size and quantity of drawers, door style, etc.
3. This concerns a one man shop with possibly a helper.
4. Custom cabinets; no written contract.
5. Okay, let's make the delays long enough to get everyone's blood boiling. The delays include material shortages, door shop delays, other trade delays, and weather delays.
6. The customer became unhappy with the cabinets during the installation process.
You stated that you are in a position to voluntarily remove the cabinets and refund all of their money. Some shops aren't in that position. Smaller shops will typically have used all money paid in to cover job expenses and are counting on that final payment for profit. If the cabinets were customized to a particular job, is it fair to the cabinetmaker that he should bear full financial responsibility (in the absence of a contract) if the homeowner decides to renege?
The delays you listed (i.e. - material shortages, door shop delays, other trade delays and weather delays) are all delays that are out of your control. The problem would be that there is no contract with a clause holding you harmless in case such delays present themselves.
Since there was no contract, I assume that they did not sign off on both design and finish, but gave a verbal approval. Here's where you are going to run into trouble. You have no way of proving that the customer made design changes. Once they have, it affects everything, from fabrication to install, and yes, this will cause a delay, which again, would not be unreasonable. If they changed a B36 to a drawer bank, well, that is going to take more time, and if you are accommodating the customer's request, after they approved the design and installation started, they need to wait for the new cab to be produced and installed, and this will also affect the remaining install, as your example is a one man shop with helper. If you are fabricating, you are not installing... hence a delay presents itself. Also, don't see how the change to the box would include a change to the door style, as you listed, as this would affect the remainder of the kitchen.
In this example, you said that the customer approved the design via drawings, as well as finish samples, and problems, from the customer's perspective, arose with the design when installation commenced. Well, that would fall on the customer, if this caused delays. They want changes made to the design they approved, after it started being installed... It should not only be more time, but more money.
That said, assuming you have installed the majority of the cabinets, and have made changes to the design via fabrication of new product, I think it would be unreasonable for the client to ask you to take the cabinets out, as they have been custom made for your client. From what you've said, they don't have a problem with the cabinets themselves, just the design issue and delay issue.
Based upon the info/scenario you provided, and with the limited details, there is very little chance we would provide any refund money, and I would probably charge them to take them out (pre-paid). This is subject to change with more info... It also sounds like something that can be worked out.
The whole point of this thread is not to look for the details of a particular situation, but to examine the process of ending a business relationship where there obviously will be discord.
I posed this question to another tradesman and he told me that in his 30 years in business, this had happened twice. Both situations ended with threats of lawsuits, but no follow through. Since we all strive to do the best job we can, and since there is no pleasing some people, I'm curious how others deal with this unpleasant situation. Again, it is not important how the situation got to where it is. Likewise, it is not important if you have a contract in place.
You need to maintain a workable relationship with the person paying the bills. If you can't, you need to figure out why and then learn from that so you don't make the same mistakes.
I have never found that a customer was so angry that a compromise/settlement couldn't be made. Doesn't mean that I have been able to collect all of my money. Sometimes circumstances change and people can't or simply won't pay you everything.
We had one very large contract where the owner called the subs together and told us point blank that he was over budget and would only pay $.80 on the dollar. Either accept it or not. So now you are faced with the choice of legal action, and at what cost - of money, energy, lost opportunity. Ever wonder how some of the wealthy got that way?
I have been lucky and responsible enough to have not come into this situation yet. But I know I could not afford to refund a client's money once I've gotten to that point in the job. My guess is most small shops would be in the same position.
So maybe the best advice is to never allow yourself to get to that point. Always stay in contact with your client from beginning to end. Keep them informed of timeline and budget changes. It seems to me from reading posts here of people who get into trouble, many if not all of the problems could be avoided with communication. We've all got computers, so e-mail is a great way to keep in contact without losing shop time. E-mail or call at least once a week, even if everything is going to plan. I don't mean to pick on contributor A, but his situation is a clear example for all of us what not to do. Communication is key, in my opinion, and the best way to avoid the subject of this post. And since I myself am guilty of habitually running behind on projects, but have never gotten negative feedback from a client, I'd say it works.
I know this doesn't answer the question, but hopefully it prevents someone else from having to ask it.
Everyone here has had clients they could not satisfy. 100% customer satisfaction means you've only had one customer. No one is talking to each other? Do you really want to force the client to allow you to finish the job and then force them to pay you for it? They will find fault with all you do all the while you're doing it. If they don't like or want what you have done so far, what makes you think they will like the rest if it is done the same way? Hypothetically speaking.
Have you considered that perhaps the client does not have the rest of the money? Whenever I have offered to refund and/or remove, which I have yet had to do, we've worked things out. Removing the cabinets is not admitting fault. It is doing what the client wants. If you are refunding the money, then the cabinets are yours. Write it off as a bad debt or resell or rework them into a similar job. But no matter what you do, you will not be paid in full for this job. The amount you lose is determined by you. But either way, you will lose.
Don't get in a three ring circus. You can work for the homeowner or the contractor, not both. That seems to be a key fault in your hypothetical.
If the customer requests, demands, or orders you to remove your cabinets and you do so per their request, what additional liability, if any, have you created for yourself? Assume that if you don't refund the full deposit, lawyers and threats of lawsuits will be forthcoming.
So far, contributor H is the only one who has a plan. If he gets in this situation, he collects his cabinets and gives the money back. The customer gets what they want and he is free to go onto to the next job. His reputation is perceived to be accommodating. He also made a stellar observation that if you were able to negotiate finishing the job, the client would most likely be unreasonable and would continue to "gun" for you.
But a problem with collecting the cabinets and refunding the deposit presents itself to the smaller shop. Most likely the deposit has already been spent on materials, supplies and labor, so the likelihood that the small shop could write a check for a full refund is slim. Not to mention that for a small shop, scheduling is everything. The one/two man shop is already stressed working 14-18 hour days seven days a week to fabricate and install a job. They may have other jobs scheduled and any delays will snowball into other jobs. So refunding the money is probably not an option for the smaller shop, which means they either wait to be sued, get punched in the nose, or beg for another chance. Either way, the small shop loses unless someone here has another solution.
I did have one gentleman who contacted me via email who shared the following experience. His particular customer was acting as their own GC. He used their design and built and installed the cabinets. Other trades came in and generally damaged some of the cabinets and modified how they were installed. The homeowner/GC also made design changes throughout the job which the cabinetmaker made, but did not modify the original drawings. The job ran over schedule and the homeowner became irate and demanded that everyone remove their stuff and refund deposits. The cabinetmaker removed his cabinets, but did not refund the money. Instead he took the cabinets to a storage building where he stored them in anticipation of a lawsuit. Sure enough, the suit came and he appeared in court with the cabinets. The judge examined the cabinets and sided with the cabinetmaker. In addition, the cabinetmaker had grossly under-priced his job. The judge ordered the homeowner to pay for the job in full based on going rates and ordered the homeowner to take his cabinets with him. Did it hurt his reputation? Definitely, with the homeowner and his circle of family/friends. Did it hurt or close his business? Not really. Lesson learned? Contracts are okay and can clear up a lot of misunderstandings. More importantly, though, was the importance of documenting change orders and communicating.
No one likes getting into these situations and they are definitely difficult to get out of. With that said, based only on the fact that the homeowner has requested that you remove the cabinets and refund the money, and assuming that no negotiation is possible, would you remove and refund, or would you stick to your guns and say that those are custom cabinets and are not returnable/refundable?
So I ate some loss, lost a customer, and changed my contract. Wrote it off to education. I knew that the customer was getting out of paying any more money for cabinets with a color that they no longer wanted. That's life.
About 5 years later, going to my van from an installation in that neighborhood, who do I see but customer, wife, and new baby. Help, help! We are building a new house, 90 miles away, and all the local tradesmen are screwing us over! (No mention of the kitchen from 5 years ago.) Can you install some cabinets for us?
Certainly can! That's what I do, you know! Because of the travel, etc., I will need to do the work on a T&M basis. My hourly rate will be $(3X normal rate). I'll need to be paid in advance for one week's labor, any overtime will need to be paid at the end of the first week, along with payment in advance for any additional week's work.
Of course the local tradesmen were boycotting finishing any work on the site, since payment for completed work was not forthcoming.
I ended up spending about 4 weeks there, paid in advance each week, installed cabinets, swimming pool deck, stairs, curved drywall. Three times my normal rate, plus 1.5 times that for any overtime after 40 hours, same deal for my helper. Made my normal rate, plus got what I had lost on the kitchen, plus ended up with about a month's worth of pay extra. Then worked on his new corporate offices. Same deal. Paid in advance. 3X normal labor rate, he buys all materials.
He understood that he could trust me to do what he paid for, but I couldn't trust him to pay for work I had done. That was our business relationship from then on. It cost him quite a bit more than being honest with other tradesmen, but being honest seemed to be beyond him.
I recently had 11k worth of adds and changes in a 3 room job. We did the work, billed the client, and she was furious with the change/adds. I mean, she was smoking from the ears. But, with the invoice printed out with original price, deposit, change, add, and final amount due, little discussion actually happened. Why? Because the time line on the invoice clearly showed she made the adds and changes. This has happened two or three times. The invoice/time line/statement almost always uprights the ship.
To even allow the situation to get to the point of removing cabinets is telling me that you are asleep at the wheel. Your time in business is not refundable, neither should custom work be. Why are you in business? To make money filling a void that you see needs to be filled, and you are going to profit from it.
Would you hypothetically allow yourself to get to the situation of no return? What on earth could go so wrong with a job that you allow the client to keep changing a design in the midst of production or installation? Does a plumber come into your home and put in a bathtub one day and then replace it at your whim with a shower without telling you it will cost X amount?
I agree with contributor H to some extent, but if you've been burned enough and shorted your family's bank account enough, you tend to put yourself in situations that don't end up in these hypothetical arenas.
Allowing clients to bully you out of money is the last thing you want to happen, because, as you are robbing your payroll to make ends meet, the client is at the dealership buying a new car. Trust me, this is the truth. Clients that demand money out of you when it was fairly earned are nothing but bullies and they will run you and your young children over to make sure they can get to where they want to go.
I've had some really tough nuts in my day, but we've always been able to work things out, usually with me having to make small compromises. Most of the time, I have found that meeting somewhere other than the jobsite helps smooth things out. The jobsite is not a good choice for a battleground since the source of the aggravation is located within sight, adding fuel to flame. If possible, call the homeowner and suggest a meeting at another location. I'll leave that location decision up to you since you have had so much time with the customers.
I've lost too many friends while doing business with them, so I've refrained from that practice. When asked, I just say I value their friendship more than money and refer them to another shop that I know to be reputable.
If the contractor hired me, I would do as he asks. However, I would expect to get paid. Unless I messed up. If he wanted red cabinets and I delivered blue, I'd fix it. But if he ordered red and the owner wanted blue, I'd explain to the owner I am just the one that builds and they need to contact the contractor.
What I do from here depends on what the contracts say. For what it's worth, I would do anything to stay out of the courts. In a recent discussion with a lawyer, I learned no matter what you have in writing, it really is up to the judge to enforce the contract or not. And it's about 50-50 if they do or not.
With that said, I think that is where we all screw up from time to time. I heard many years ago that the quickest way to get in trouble is to over-promise and underachieve. It is way too easy to get caught up in the details (especially for small shops) and forget to document change orders or to even communicate with the client. And for whatever reason, when the client calls to complain, how are you going to respond if you haven't documented every aspect of the job?
Before I forget, I wanted to take this scenario one step further. Assuming the client has demanded you remove and refund, and assuming that the last client contact was a negative experience with tempers high, common sense dictates that we all go to our separate corners and cool off. With that said, what tactics, if any, have any of you used to reestablish contact? What steps have you taken to turn a lemon into lemonade?
Granted, in a perfect world, we would all get along. One of the best pieces of advice I ever received was from my scout master - "Be prepared." There is nothing wrong in having a plan in place when the customer wants you to remove your millwork and refund the money. I know that most small shops may as well close their doors if they have to refund a deposit that was already spent on materials and labor. One of the best pieces of knowledge that I have gleaned from this thread is document and communicate.
Sometimes I can tell how some people are going to be in the beginning, and sometimes I can't. I've always found the long invoice thing good fire power. I'm suing a builder now that just bullies his way through life and I'm just going to let the courts stop him.
I think a few contributors added the great insight that these people are difficult to deal with and instead of letting them run your business and you into the ground, you have to make them abide by your terms.
New people to business need to understand that the business runs on your terms, and as long as you abide by the agreements you made up front, it can save a lot of problems from happening. Another thing I had to learn the hard way is that when people buy a shop drawing, you need to enter into production pronto - this actually forces the issue of change orders because you are not lying.
Another thing we do is, we don't quote completion dates. We make it clear that our first priority is quality and we will sacrifice time in order to achieve quality. We have a sheet that explains that their project is put into a queue and give them an approximate completion date. I have turned down many jobs because the customer was adamant about an exact completion date.
Finally we do all our negotiation before the agreement is signed, and I always leave a buffer in the price. After the agreement is signed, we switch priorities to making the customer happy. I will quite often throw in a couple of extras or changes without cost afterwards, as long as the customer is aware I am throwing it in, and as long as it doesn't cost a lot. This goes a long way in keeping the customer on side and eliminates a lot of problems.
He started complaining about the construction, etc. and wanted me to refund his money and get my boxes out of his house. He got so mad that he was cussing and throwing things (all in front of his kids). His wife sided with him and even called me names. The countertop guy was there and intervened and said that nothing was going to get solved acting this way. After much discussion, client said to do it his wife's way. She started in about how she wanted the drawers narrower and deeper. Also wanted the toe kicks to be close to ground instead of at 3". Listed a whole bunch of other things, too. When she finished, I told him and her that their cost was going to be a whole lot more. He started in on me again, so I left. He called me later and wants me to come back over after August 1 to finish the job.
Intuition can tell you a lot and I feel like they are used to doing this. I felt like they confuse the situation in hopes of getting more than what they paid for. I'm undecided if I want to finish the job. If I don't, do I have to refund the money and take what was already installed out?
Please remember to keep your head at all times. This allows you to run the business properly. Do not refund any money - do not. You can not get a refund on your time, nor your vendors on material. This guy is a bully and you are very, very lucky he did not come after you. You've got to get it in your head you are an expert and a professional. Do not let anyone bully you out of money. Do not give them a dime back. If you have kids at home, the money you give back is right out of their mouths. This should almost anger you when you compare the end result of giving money back to a bully. They need to treat you with respect. Don't threaten them, just get up and leave if it gets out of control again.
It sounds like you have put yourself in the middle of a family dispute. I have had customers practically beating each other up in our showroom. I don't think it's too late to salvage the job. What I suggest you do is write down exactly what happened, with time lines of when the changes were requested, and present it to your customers. If they start fighting, just tell them that you have to leave and allow them to go over it on their own. Every time customers fight amongst themselves, I tell them that decisions don't need to be made now, and I let them hash it out by themselves. You might even want to throw them a bone or two by offering to do some low cost change free. After all, you are partly responsible for not having change orders signed. Let them know that you are going out of your way at your expense to make them happy. I have actually salvaged situations like this and turned them around to the point where they became great customers. Another thing we all need to do as business owners is to swallow our pride. Our actions need to be strictly business, and professional. Decisions should not be made on emotion.
When a job is coming to an end, we can get a good read as to whether or not we will have problems collecting the last check. As long as you have performed according to the contract, you can feel secure when you place that lien on their property. This usually wakes them up. Everyone should learn about lien laws in their state and how it can help you.
