Contract terms

[Kipper]

Hi all,

I'm in the process of ordering a new (production) boat but I'm having problems with the dealer regarding the terms on the purchase agreement. I can't believe anyone actually agreed to the original terms they are, surprise surprise, heavily biased towards the dealer. Maybe no-one ever read them

Anyway, I've got a lot of things cleaned up but one of the stumbling points is a default clause, the dealer wants to be able to charge up to 20% of the purchase price (this comes to about $45k) to cover any expenses associated with a default and also cover any incentives they may want to offer a new buyer.

Obviously I have no intention of defaulting on the purchase but stuff happens. I realize the dealer may have some expenses to cover if it comes to this but $45k seems a huge amount to hold.

What do you think is this amount totally outrageous, somewhat outrageous or par for the course?

[acesatsea]

I see no one has replied to this, so I'll try. I have just one word for you: attorney. I too like to tell bad lawyer jokes (What can you say about an airliner at the bottom of the ocean with 200 lawyers ....). But when it comes to my money up against people with experience writing contracts, I want some power on my side. I sleep a lot better. Hope it goes well.
Regards, Bligh

[Benny]

Hers's a suggestion that may work for you:

If they won't budge and you really want the boat, offer to buy a performance bond (insurance) for a payout amount of the 20%. Date it when the actual pruchase contract is signed and include an expiry date of when they say the boat will be in your hands. It won't cost much and it will hold them to the delivery schedule that is agreed to. Make sure that their responsibility to deliver the boat on time is theirs and stated clearly with no escapes in your contract. You will not have any further default responsibility after that date, because if they fail to deliver on a date stated in the agreement, then they are in default and you then have recourse to penalize them for that breach and can seek remedial compensation. The very least this will do is protect you and hold them responsible for any delay. It would also be wise to have your lawyer author the agreement on the performance bond to insure they don't have wiggle room.

[Benny]

BTW - is there a different dealer with better terms you can use?

[Boracay]

Or you can wait until someone defaults and get a better deal that way.

[Steve Kidson]

Been involved in contracting and contract negotiations for years as a part of various jobs/investments and can say that my experience has been that the person offering the contract usually has the contract drafted outragously in their favour.

One in particular I can recall had 4 pages of fine print that was to be my obligations, and 3 paragraphs outlining their responibilities and obligations. When, during negotiations I pointed this out, the response was along the lines of "yeah, so what??"

Only advice I can give is to make any concession or negotiation conditional; ie I will agree to ..... if you do - - - - -"

Good luck.

Steve

[Kipper]

Thanks for the great advice... in the end the dealer agreed to my terms so the 20% for a default was dropped and the boat is now on order