When is a contract a legal contract?

[mambo]

That dilemma only surfaces in countries where you basically have the law of the street. If the judicial system would work none of this would happen, because a contract on paper will actually mean something.
Although..................even there I have seen enough tricks already (company needs to build a house, gets paid, quickly declares itself bankrupt and the wife of the owner simply starts a new company !)

But in case the builder does not have enough money you could do what Darcy suggests, pay them wages instead of paying them to do the job. It would mean that you would have to go to the shops to get all the building material yourself, so don't know if that is a good solution (perhaps if you have a lot of spare time).

[valiant]

thats right Carol. people need to be reasonable and fair. ive seen many people hire someone and turn into little picky dictators, who threaten not to pay. take it easy.
ive seen a group pf germans whove moved here, had their homes built on the black by illegal immigrant groups from bosnia, and these germans were acting like hitlers, while they were actually participating in criminal activity and pretending to be all just a rightous little dictators, who employed poor balkaneers, whove been through hell and have to feed their families by working like dogs. and a boss who deals with germans and pays his workers crums...well you can imagine what its like to work for such a person.

[darcy]

From all the discussion I have few questions:

- every employee should be paid in advance (as the boss is paid in advance, they should be as well)?
- I should ask the builder to show me the working permits, make sure his workers receive fair wages and I am dealing with the EEO employer. (Can I add also workplace insurance and make sure taxes are paid as well, or you think it is not really necessary?)
- When builder receives a discount for material, am I entitled to it as well (as you would like for me to pay the material up-front), or - what?
- Should I ask for the invoice? Should I pay them in cash on the spot or make a deposit on their bank account payable in 30 days?

[mambo]

I would always ask for an invoice, since that way the builder knows that the tax office will know he is working. If he doesn't report it you basically have him by the 'b.a.l.l.s' if you get problems with him. It may not solve your problem with the construction, but at least he will have a sufficient amount of problems himself.

Paying cash in that case becomes difficult, since a company can only receive 5000 Kuna (maximum) in cash and can also only pay 5000 Kuna in cash. If it is a bigger amount it has to go via a bank transfer or...............pay in amounts of 5000 Kuna.

The discount on the material is always the problem, since it is his company which gets the discount and not you. He gets it because he is a frequent customer, however...........if you decide to buy all your material from one company you may also get much lower prices, but usually the company keeps that discount as additional profit for them.

Asking for the working permits is not your problem and I would not ask for it either. Simply tell him, or put it in writing, that he works according to the law. In that way you are always covered and let him figure out with whom he wants to work. After all, you are building a house, you are not trying to change the world.

Paying the boss in advance is something I would not do, how he pays his employees is not your problem, that is for him to figure out. If I have to start worrying about the employees of every company we work with I think I should change my job.

[darcy]

Well, I never ask for an invoice as I was always asked to pay in cash. It is not ideal for me, as I would like to pay more from the company account but I did not manage to do it yet. (I get some income in Croatia, but instead I pay it with my after tax money.)

[mambo]

If they don't give you the invoice it means they keep it as black money and that means their profit is even higher than it already was !
Next time simply ask if it is the price incl pdv or excl. pdv. If it is incl. pdv they can give you the invoice without a problem. If they all of a sudden increase the price with 22 % you know that it was excl. pdv, but in that case I would re-negotiate the price. It is absurd that they always think that everybody is asking for prices excl. pdv.
I know you will get the pdv back, but you still had a price increase of 22 % without prior agreement, e.g. that 650 euro would have been 532 euro if it was incl. pdv. Now you pay 650 nett and 790 incl. pdv.

[darcy]

My problem is not the PDV but being able to pay from the company account instead of always drawing a petty cash and then finding the proper ways to justify it.

When I negotiate, I always ask for 10% off the asking price in exchange for immediate payment (once work has been finished, of course), but I think in Croatia it is very uncommon for the tradesmen to work with invoices. (Anybody there successfully pulling out invoices from the tradesmen?)

It is even more frustrating, I am finding the process of bargaining very difficult; it seems to me people do not like it and I think they are finding it offensive instead of finding the ways to strengthen business relationship.

[londoncro]

darcy said:

My problem is not the PDV but being able to pay from the company account instead of always drawing a petty cash and then finding the proper ways to justify it.

When I negotiate, I always ask for 10% off the asking price in exchange for immediate payment (once work has been finished, of course), but I think in Croatia it is very uncommon for the tradesmen to work with invoices. (Anybody there successfully pulling out invoices from the tradesmen?)

It is even more frustrating, I am finding the process of bargaining very difficult; it seems to me people do not like it and I think they are finding it offensive instead of finding the ways to strengthen business relationship.

Bargaining in Croatia?

A 'win win situation' is an alien concept in Croatia.

[Carol]

Darcy we renovated and we have a whole folder full of builders invoices as well as those for materials.
Mambo, PDV is not the problem for the builders because ultimately the end buyer pays it . The problem is profit tax, and for the these companies I bet it is the number of Bosnian workers who they have to pay in cash.

[darcy]

Carol, did you bargain or did you go for the asking price when dealing with the builders?

I am suspicious, bargaining in Croatia is an invitation for paying in cash with no invoice. I did not mind being in that situation before I had to put all my Croatian income to the Croatian company account, but now it really hurts.

[Carol]

We got three quotes for each job, bought the materials ourselves and paid the price according to the quote we accepted. The big difference was we had a project manager so the quotes were coming in at reasonable levels in the first place.

Typically we paid by the job not by the hour. So x kn per square metre of tiling etc. I think it is a mistake to pay by the hour for such things because the builder is not motivated to do the job quickly and well. It is hard enough to get the job finished at decent rate without encouraging the builder to drag it out by giving him more money if he works at half speed.

If you sack a builder for poor workmanship or slowness when paying by the hour, then the next one will assume that you are a nightmare client and try to charge you more to finish the job to compensate with the hassle of having to deal with you. I don't blame them for this: I'd do it too. Good clients are a dream and nightmare ones make you think life is too short. So if I was a builder who suspected that someone was a little Hitler then I'd charge them more by way of compensation, wouldn't you?

[darcy]

I never pay by hour and I always ask for few quotes. I consider a quote a good one if it is less then I will pay at home for the same job. (Croatians are generally good - I never sacked anybody - but generally unproductive what puts them very close within the home tradesmen range.) I always ask for a discount and I am doing hard to get it (I do not like a business if I can't get it), I hope that does not make me a Nazi (or at least a ... Scotsman). I asked for an invoice every time and I did not receive many yet. Also, I hate making coffee, buying beer/wine or buying lunch/marenda (even I know very well that is a must in Croatia), but a barby is OK when the job is done.

[Carol]

I didn't mean you were a nazi!! I meant that builders think there must be something wrong with the client if the previous builder walked off the job. Let's face it, there is a chance that the builder would be right because people don't usually abandon jobs unless there is a problem. We acn only guess the problem of course, but here are some options:-
- the client is too demanding
- the client didn't pay
- the client paid everything up front
- the builder can't finish the job because he's not able to

[darcy]

I totally agree. I can add also:

- builder underestimated the job and quoted too low
- in the meantime, builder got another job(s), bigger and better paid