I often get telephone calls from molders telling sob stories about how they got burned by a customer, a supplier such as a mold maker, or an employee. Their biggest lament is that things just aren't the way they used to be. ``It used to be a man's word was asgood as his bond,'' said a molder recently, who got stiffed by a customer.
``Twenty years ago, we operated our business on a handshake,'' said another.
Both wanted to know why you just can't trust anyone in the plastics industry these days. I'm not sure I have the answer to that, but there is one area of knowledge in which many plastics processing company owners are sorely lacking: law.
The handshake and the verbal promise, I am sorry to say, are as outdated as Bakelite. Contracts drawn up in accordance with state laws governing business and trade practices are the only way to do business.
Whether it's supplier agreements, customer agreements or employment contracts, plastics processors large and small need to conform their operations to the law by using contracts.
``But I've had a tight relationship with the purchasing agent at ABC Co. for years,'' you say. ``We've always done things on a verbal agreement.''
Great. So ABC's purchasing agent drops dead one day and you have just completed a $10,000 change to a mold on a verbal agreement. The new guy wants to see a purchase order number before he pays the bill.
Mark Mahoney, a San Francisco lawyer, said it's not the guy who made the original handshake that's the problem. It is his successor you have to worry about.
Maybe the new person doesn't know you from the guy across town who supplies nuts and bolts.
Sometimes it is the company owner who might be incapacitated for some reason. Others in the company don't have the same relationship with the customer, don't speak the same language as the owner does. Then what happens? All too often it ends up in court.
Many processors have the standard sell/purchase contract written in fine, gray print on the back of the quote but few take the time to see if that language really covers them. Few even read the contracts that original equipment manufacturers send along with purchase orders.
Mahoney said in one particular case a judge said, ``I do feel that when two commercial enterprises send invoices to each other with terms written thereon, that the recipient is duty-bound to read them. If he doesn't, why, that's at his own peril.''
Mahoney said, ``If you can avoid one mistake in writing a contract you have a lot to gain financially.''
Processors owe it to themselves and their companies to know the law in their respective states. Ignorance of the law is still no excuse and can result in a company's demise.
Goldsberry is a Plastics News correspondent based in Phoenix.