"We'd win if we sued them," our attorney told me.
"There's a problem with that."
"You said we'd win."
"We can't," he said.
"Can't win?" I asked.
"Can't sue."
We were in the attorney's office discussing a builder-customer who was refusing to make final payment on a large millwork order. The builder claimed there were problems with the order, and he wanted compensation.
In fact, there were plenty of problems with the order, but the builder had caused them all. He had pushed us to order material before the house was framed, claiming he would build the house to meet our specs. He had signed off on the measurements and the special order contract, so things were pretty cut-and-dried–he owed us for the original material that was ordered as well as the additional material we ended up providing to finish the job based on how the dimensions on the house actually ended up.
When we tried to collect over the course of a month, he made no mention of any dispute. In fact, he thanked us for rushing through the additional material. During the following month, he claimed to be waiting for a payment from his client. Then came a month of total radio silence.
We had our attorney mail a letter explaining our intent to collect the debt. He responded with his claim that we owed him money.
After reviewing the paperwork, our attorney asked me to stop by to talk about this problem. Ten minutes into the conversation, I had a splitting headache. I knew we could win the case if we sued, but for some reason we couldn't sue.
"So, we'd win?" I asked, recapping.
"Absolutely."
"But we can't."
"Right," he affirmed, slapping the paperwork in front of him.
"Why not?"
"That's complicated," he said, cringing a bit, hoping I'd stop there. I didn't.
What followed was a barrage of legal terms, references to clauses in our contract, and the passing back and forth of quite a bit of paper. What it all came down to was the fact that our contract called for arbitration rather than litigation.
"What does that mean?" I asked.
Another fusillade of verbiage followed, this time complete with dusty law books coming off the bookshelf. It seems that arbitration is an alternative to mounting a full-blown case.
This particular situation was so straightforward and the dollar amount so low that we simply could have sued for payment in front of the justice of the peace, which is even easier than going to arbitration. But per our contract, we would have to take this to arbitration, and that process would cost nearly the sum we sought to collect.
We have a special order contract because, over the years, we have had our share of non-paying customers. When we did end up in court, what usually happened was a compromise. We thought with some legal documentation and customer sign-offs, perhaps we would have an advantage and not have to concede a portion of our bill to reach a settlement.
The arbitration clause makes sense for some sales and not for others. And I think that is true for all of our legal documentation. There is no clear-cut, perfect contract that works to your benefit every time. But I was aggravated this clear-cut case was going to cost us money.
"Why does our contract say that?" I demanded.
"Because that was the way it was written," the lawyer answered matter of factly.
"Who wrote it that way?"
"Well, to ask who wrote it that way is to imply it was written incorrectly, which, point of fact, is not consistent with the evidence. Consider the first section of the contract, excellently covering the terms of the sale ..." He droned on and on, using more legal terms than I care to ever hear in one sitting.
I recognized immediately that he wrote the contract.
Tad Troilo is a manager for Cranmer's Kitchens by Design in Yardley, Pa. 215.493.8600 E-mail: [email protected]
