Taking Advice

[GaryD]

Hi,

Crusty has read my blog post......Taking Advice.

In the post, I make the following statement.....

Once you’ve got all of that in hand, get your lawyer to draw up a contract that contains appropriate performance benchmarks. The inclusion of penalty clauses for non-performance will also help to sort the wheat from the chaff.

It goes without saying that, if your prospective supplier baulks at such a contract, you should retreat from the proposal at a fast gallop.

.....to which Crusty responds with.....

While I agree that people should do their homework any worthy supplier can show previous successes, contracts I can not see as a valid option.

I think you will find every supplier will not enter any such contract. It is presumptuous to suggest they would. There are suppliers that will require a large percentage of the turnover to secure their professional support. Many people do not want to pay for those expertise so will not enter into a contract.

Suppliers generally support their designs however unless the operator employs professionals in aquaculture/plant culture or has the required skill themselves, there is absolutely no guarantee of success. Those skills can only increase the chances of success, not guarantee it.

If Joe Blogs wants to build an aquafarm, there is nothing stopping him but it is him that is ultimately responsible for the success or failure not the supplier. Imagine if one of the employees or himself do not notice a dead fish stuck in the outlet of a tank and it in turn reduces the flow rate and starts to kill the rest of the fish, even though the first cause for the death was a parasite. I can not see any supplier, saying “oh bad luck, please let me remunerate you for your losses”.

I have seen aquaculture farms go broke from the simple introduction of a deadly fungus in their hatchery. There are far too many anomalies for a contract to stand up.

There simply are no guarantees in this type of environment.

Your suggestion that I was seeking a guarantee of system performance is an assumption.

What I had in mind was rather more down to earth......more in the nature of the sort of contract one would (and should) get a builder to commit to. It would reasonably cover things like deadlines for the production of designs and drawings, for the supply of components, for the installation of the system and for its commissioning.......all at the agreed price.

I'm aware of at least two instances where failures of this type put commercial systems at serious question. If people are willing to take your money, they should be prepared to do what they say they're going to do......or pay a penalty.

Business, at every level, contracts around such things......every day.

It separates the performers from the bottom-dwellers.

Gary

[Crusty]

Fair enough. We have never needed any form of contract, nor have we been asked for one. Nor would we enter into one, but in your measure, this would make us "bottom dwellers" in which our reputation speaks for itself and confirms we are not. I still see no reason for supply contracts. Take for example we design to build you a system Gary and your system requires a drum filter, these come from France without this proposed supply contract. Quite a few times, the money transfer (often $25K to $40K) or the con notes have been inaccurate or gone missing and this had held up delivery of the filter for 3 or 4 weeks... We would be penalized with your unrealistic contract suggestion for something that is well out of our control. I have never seen an operation go broke simply because the commissioning date was extended and I have seen quite a few of them.

[GaryD]

Hi Paul,

Fair enough. We have never needed any form of contract, nor have we been asked for one. Nor would we enter into one, but in your measure, this would make us "bottom dwellers" in which our reputation speaks for itself and confirms we are not.

I never suggested any such thing. I simply made the point that a contract sorts the performers from the bottom-dwellers. It provides a legal remedy for people are the victims of false claims, poorly made equipment and non-performance around delivery schedules and the like.

If you're not guilty of the above then you are a performer.......whether you have a contract or not. If you were guilty of the above and your client had a contract, they would have a legal remedy......and that's the way it should be.

I still see no reason for supply contracts. Take for example we design to build you a system Gary and your system requires a drum filter, these come from France without this proposed supply contract. Quite a few times, the money transfer (often $25K to $40K) or the con notes have been inaccurate or gone missing and this had held up delivery of the filter for 3 or 4 weeks... We would be penalized with your unrealistic contract suggestion for something that is well out of our control.

Since you would be responsible for determining the initial schedule, it seems logical that you would factor in those contingencies that might lead to delays. The situation you have described is no different to the building industry where contracts are the norm and simply provide appropriate protection for both parties.

I have never seen an operation go broke simply because the commissioning date was extended and I have seen quite a few of them.

I've seen a couple that were seriously disadvantaged because of non-performance.......and long before you go broke there's all sorts of financial hardship, disappointed customers and damaged reputations.

Gary

[Rew]

Fair enough. We have never needed any form of contract, nor have we been asked for one. Nor would we enter into one,

Hey Crusty,

If you shook hands with your customer, and agreed to perform in a timely maner you had a contract. It may have been informal, and hard to prove or enforce, but a contract none the less.

The penalty clause would be the loss of your reputation.

So, no bottom dwelling