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Spring 2014 - Tried and True by Ray Prince

March 30, 2014

BY RAYMOND J. PRINCE

 9 THINGS EVERY PRINTER SHOULD KNOW BEFORE BUYING SOMETHING BIG

Your company is poised to make a major hardware purchase. You are excited—you look forward to making money as well as providing customers with a better product. You like the salesperson, a guy who lightly pressures you to sign the “standard contract” that everyone signs.

The salesperson assures you this is a good deal and reminds you that the offer is good for a limited time. Have you read the fine print at the end of the contract? What about the payment terms? Remember the seller writes the contract, and, in most cases, the terms favor the seller. But the contract needs to be fair to both parties.

Before I offer my advice, here is one caveat: I am not a lawyer. Consult your lawyer on all contractual matters. Having been in this industry for more than 55 years, I have seen many successful purchases and too many purchases that turned sour. I have been an expert witness numerous times, representing printers who have been sold a product/machine that will not perform as expected or will not perform at all.

1. Whose laws is the contract governed by? What state or what country? If you have to bring legal action, do you really want to bring that action in another country?

2. If you are purchasing new equipment, make sure the contract says “new” and defines “new.”

3. Length of warranty period can be a good negotiating point and can perhaps be extended at little or no cost. The warranty should begin when the equipment is installed and passes productivity and quality tests, and the tests should be done 30 days after the equipment has been placed in production. This is fair to both parties in that the printer’s people will know how to operate the equipment well at that point and the manufacturer will have had time to work out all the bugs and reduce the open item list.

4. “As is, where is” is a dangerous way to purchase equipment. If you like to gamble, this type of deal may be for you.

5. If you need the product to achieve a certain level of productivity or quality, state so in the contract. Too often, this becomes an issue after the machine has been installed.

6. Many contracts provide that if all else fails, remedy must be through arbitration by the American Arbitration Association. Keep in mind that a judge in regular court or at the AAA will not know printing, and, in the case of the AAA, there is no appeal. My preference would be to make the case before one of the leading association executives of the industry.

7. Payment terms are always interesting. I like the idea of 25% to 30% of the money being paid 30 days after the equipment is accepted. Most contracts state that full payment must be received prior to installation. If there are issues and you are holding 30% of the money, you are in a very good position.

8. Acceptance testing is best done 30 days after the equipment is up and running and your people have been trained on the machine.

9. Pre-training is a good idea. Taking your operators to a recent installation and letting them see the new equipment and talk to its operator can launch the project on a positive note.

PARTING WORDS OF WISDOM

Going to court is expensive and no fun at all. Do your due diligence. Treat the machine installer/s very well, as they can be most helpful in educating your employees. Remember: The time to argue and negotiate is when no money has been exchanged and equipment is not on your floor!

Raymond J. Prince retired in December 2012 but remains one of the wisest and best friends a printer could ever have.

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