Remedies if business fails to install in time for tax credit?

[NBrazil]

What is the name of your state (only U.S. law)? Georgia

Two months ago I signed a contract to have new windows that meet the requirements for the energy tax credit and was assured that, even with high demand, that they would be manufactured and installed before the expiration of the tax credit on December 31, 2010. I made it clear that the ONLY reason I was buying them was because of the tax credit (it reduces my cost by 25%).

Right now there are only 10 days left in the year to install them (and two of those days are holidays). I was informed a week ago that they should be ready by today and they scheduled me for an install on the 28th. So far so good. The thing that concerned me was at the time that they set up the install date that they said not to worry about the tax credit because I only had to buy them before the end of the year and not install them.

So I looked it up and found: To qualify for the tax credit, the product needs to be*"placed in service"*by December 31, 2010. The IRS defines "placed in service" as when the property is ready and available for use.*It's not when you purchase product, but the day installation is complete, and you are able to*use your new product.

This contradicts what they said last week and when I originally met with the salesman.

It is a standard contract so my simple question is that if they do NOT manage to install them before the clock runs out are there any legal remedies or, as I suspect, it is just something I have to just accept?

Of course I can try to negotiate something or post my experience on a site that lists buyer's experiences as feedback - but for the moment, I'm still expecting everything to go fine even with the short time frame remaining. I'm just seeing if there are any options if things go sour.What is the name of your state (only U.S. law)?What is the name of your state (only U.S. law)?

 

[tranquility]

Generally, one does not get the benefit of consequential damages in contract.

The age-old case goes (extremely rough paraphrase) where there was a mill where the mill axle broke. The mill owner went to the mill axle place many towns away and bought an axle and explained the problem that his mill is out of business until he gets the axle. Because of this, he then pays extra money so the axle will get there with the absolutely fastest ponys in the land. Instead, the mill axle place sent the axle the usual, slow-boat-to-China method.

What result?

The mill axle place is found in breach of contract with the damages being measured as the amount extra that was paid for the fast ponies. No money being given for the extra time the mill was down because of the slow transit.

Compare and contrast.

 

[NBrazil]

Just as I suspected. So the only "remedy" is informing the company that I will use "word of mouth/internet review" to spread the word and if they wish to make a good will reduction in the price, that is their choice.

I figure reporting factual information in an appropriate venue in a straightforward manner is not slander.

Well, I still expect that it will be done in time, just wanted to understand a worst case scenario.

Thanks.

 

[Hot Topic]

And someone will probably respond that you should have looked up the law the moment you decided to get the installation done so you could qualify for the tax credit.

 

[NBrazil]

What I should have done was have something added to the contract (hand written?) stating that it was void (or something to that effect) if the product was not installed by a certain date. (Although I don't know if such an addendum is even possible or legal.) You see the salesman knew the nuance of the law and said that it must be installed before the end of the year, only he assured me that based on his experience, that with that deadline nearly three months away, the company should have no problem meeting it. My concern kicked in when the company got back to me a week ago to tell me when they expected to have the product in their hands and not to worry because I only had to pay for it before the end of the year (!).

Well, "should" is the key word. It is scheduled for next week (last I checked), and so I will confirm with them that I will be remaining at home on the day before it is due and we shall see what we shall see. Again, I expect everything will go fine - I'm only writing this to be prepared if it doesn't.

 

[tranquility]

What I should have done was have something added to the contract (hand written?) stating that it was void (or something to that effect) if the product was not installed by a certain date.

Well, I think you did. I would certainly make the case that they were aware of your purpose and the salesman assured you it would be done in time and that, if it is not done, they are in major breach of the contract. I believe you could rescind the contract if they don't install the windows appropriately.

What I would have done is to add a penalty portion of the contract, or, an incentive. Say that if the windows are done by 12/31, then you will pay $100. If after, $75. Something like that.

 

[NBrazil]

Update

Bad weather has kept them from shipping the product, so it will not be here in time. Nonetheless, it is a contract (without stipulations) and so both parties are bound by it.

I really am uncomfortable with their "solution," of backdating the installation on the paperwork because it was their "intent" to have had it installed in time and my "intent" to use the tax break. I feel uncomfortable because this is potentially messing with the IRS. I'm boxed in, because I budgeted based on the tax break. Yeah, I know, the law is blind, and hindsight is 20/20. I can either accept their "solution" or add to my debt. Loverly choices. For personal/obvious reasons, I'm not posting my decision here - not the least of which is that I haven't yet decided!

Given the "solution" that was offered, is it really reasonable to attempt to void the contract? I suspect based on earlier comments, it would not stand up in court and then I would also be out the additional money by refusing their offer. Urgh, I hate "situational ethics," they really "aren't!"

 

[tranquility]

You wrote:

Two months ago I signed a contract to have new windows that meet the requirements for the energy tax credit and was assured that, even with high demand, that they would be manufactured and installed before the expiration of the tax credit on December 31, 2010. I made it clear that the ONLY reason I was buying them was because of the tax credit (it reduces my cost by 25%).

The contract had a time of performance and the reason why. I would certainly argue it is a major breach if the windows were not installed by the promised date as time really was of the essence. I would send a written letter by mail and fax immediately demanding a guarantee of performance by the end of the year or you will explore your legal remedies from their breach of contract. I'd then call and talk with them. See what they'd say. If they don't give an adequate guarantee, tell them you will get someone else to install them by the end of the year and you will charge them the difference between your contract with them and the amount it will cost to mitigate your damages.

Backdating things to show something put into use before it is actually put into use would be conspiracy to commit tax fraud if the intent was to circumvent the clear meaning of the code.

 

[Zigner]

You wrote:
The contract had a time of performance and the reason why. I would certainly argue it is a major breach if the windows were not installed by the promised date as time really was of the essence. I would send a written letter by mail and fax immediately demanding a guarantee of performance by the end of the year or you will explore your legal remedies from their breach of contract. I'd then call and talk with them. See what they'd say. If they don't give an adequate guarantee, tell them you will get someone else to install them by the end of the year and you will charge them the difference between your contract with them and the amount it will cost to mitigate your damages.

Backdating things to show something put into use before it is actually put into use would be conspiracy to commit tax fraud if the intent was to circumvent the clear meaning of the code.

I don't see anywhere that there was anything mentioned in the contract about the time-frame for installation...

 

[NBrazil]

I don't see anywhere that there was anything mentioned in the contract about the time-frame for installation...

Nope, I've read over it and their wasn't... in the written part (the part that counts judicially I wager). Verbally it was mentioned as important when I was discussing my reason for making the purchase at the time and it seems that the local office acknowledges that verbal part (which is why I would guess that they offered to make sure the paperwork would comply with what I needed).

Still, even I know that a verbal contract isn't worth the paper it isn't written on.

 

[tranquility]

I don't see anywhere that there was anything mentioned in the contract about the time-frame for installation...

Sure it was--unless the written contract had a different time of performance specifically listed, the parol evidence rule would not prevent the OP from presenting other evidence showing his goal and his discussion with the salesman per UCC 2-202.

Even if the contract did not include the term, time of performance is usually a major term in contracts (QTIPS- Quantity, time of performance, identity of parties, price, subject matter.) and per UCC 2-204 tells us it would not fail merely because a term is not defined or is indefinite.

We then go to 2-208 to find greater definition of the terms. Or, if we pretend the salesman did not state a time we can prove up we can jump to UCC 3-309 to find what happens if we don't have a specific time provision in a contract. A key is reasonable.

I would say three months along with evidence of a specific conversation with a salesman regarding a specific time deadline provable by statute specifically covering specific goods covered by that statute is a pretty good argument the business is not acting reasonably.

Of course, they can claim they acted reasonably and that they are not in breach. That's why I did not tell the OP not to threaten a lawsuit, but to make certain demands. If the company does not satisfy him, at the very least I would claim it is a breach of the written contract--no matter if the contract has a time certain or not.

 

[NBrazil]

I'd then call and talk with them. See what they'd say. If they don't give an adequate guarantee, tell them you will get someone else to install them by the end of the year and you will charge them the difference between your contract with them and the amount it will cost to mitigate your damages.

Backdating things to show something put into use before it is actually put into use would be conspiracy to commit tax fraud if the intent was to circumvent the clear meaning of the code.

SOL. Y'see, there never was an option go "get someone else," because the windows have to be manufactured, they are non-standard. So I could not have gone to another company and charge the difference because these are not off-the-shelf windows. Not enough time given the delivery date of 12/20 and install date of 12/28. I simply had good faith that they could be manufactured and installed in 11 weeks. So now I'm stuck with either the conspiracy or coming up with another $1,000. Obviously the latter is the right choice, but is it doable? I don't know.

I may try one more phone call and mention that their solution is the "conspiracy" one and I would like out of the contract and see what they say*. My situation is that this install was being done for comfort and the tax incentive, my energy costs are already very low and it would never pay back due to my unique circumstances.

*One problem is that the items have probably already been manufactured, so cancellation would be costly to them (I assume). I'm basing this on their remark that they are being held up by the weather, and the weather wasn't bad LAST week when they were supposed to be delivered. So I'm guessing that I should have called on the 21st to confirm delivery. Well, I didn't, and that may be what costs me in the end.

 

[NBrazil]

We'll see...

Regardless, I will learn from my experience...

I'm attempting to reach the National Sales Manager who sold me the product as I recall he specifically stated that one of the things that distinguished his company from the others was integrity - that they would not take orders through December and "back date" them to get the tax break. Well, that's exactly what is going on. (Please note, there are dozens of reviews of this company, with the vast majority of them positive, and the few negatives have company representatives contacting the reviewer to make things right - so it isn't like I didn't do my research.)

Since, in the end, I can't just go to another company... so, if I have to suck it up, I'll just post my OWN review with the pro's and cons. All truthful. If I can't reach the above person, I may try the local office again and let them KNOW what I will be posting. Not in spite, there is no spite, just information only, if I have to eat the additional cost. Sigh.

(Who knows, maybe they will absorb the effective increase as a cost of doing business to keep their record clean? Probably will kill any profit.)

 

[NBrazil]

Son of a gun...

Okay, seems that (within reason), there is "interpretation" of the law... literal and practical (so to speak).

The use of the word "back dating" was all ME. Seems that the way it works is despite the literal wording, that the paperwork provided reflects the purchase date only. There is no paperwork to be filed that reflects the installation date despite the wording of the law. In fact, in reviewing the forms to be filed with the IRS, nowhere on them do they have a place to provide that date, only that one provides the paperwork from the company that did the work, paperwork which, again, only reflects the sales date. That's the only documentation one needs (from what I can see).

Canceling the contract would be possible, but it would involve significant costs, so I may as well go ahead with it. I have a call in to my CPA to confirm what was discussed. It seems that while the wording of the statute is specific, the actual implementation is vague. That's the way I heard it.

I'll let my CPA decide if I need to come up with the additional money and move ahead. Lesson learned. (I was satisfied with my conversation, but that can't really change the circumstances.)