Buying a Kit - Lambo Lounge

Notes - Buying a Kit

As a new builder... What should you know, and what you should do.

There are a lot of good and honest builders and manufactures out there. How can you protect yourself from getting ripped off, when you go to purchase your body? It happened to me, and I want to make sure that it doesn't happen to you!

I have collected some great advice from other builders on steps you can take when it comes time to purchase your kit or order your parts.

Any "good business" should never require you to pay for everything up front - it is a good sign something is wrong (this is the lesson I learned). I would think the kit supplier would have a these parts or body's ready to ship, that's what they advertise that they do… make kit car body's… then why should we (as builders) have to wait months for these part, it just doesn't make business sense? I would think that they would have all the parts in stock as part as part of there business plan.

If you have some advice that you would like to share, please help others and write me - Fletch

Get it in writing - by Fletch

We have all heard the saying, but when it comes to buying a kit car… how do you specify the unknown, how much can you actually put into writing?

Let me give an example, lets say I want to purchase diablo body. I call a manufacture and get a quote for $4,000… I think this is a great price so what am I really getting?
• When will the body be delivered? (what if he does not meet that date, then what)
• Will the windows fit?
• What type of material is the fiberglass?
• How thick is the fiber glass, and gel coat?
• What warrantees or guarantees will I have?
• What if the shipment is damaged?

I think I am smart enough to get these questions answered in writing? What happens if the body is delivered and you find that the body side panel is warped… is this covered in the written agreement? The manufacture fabricated a body for me, it’s not cracked, windows fit, the material is correct… so basically I got what I ordered. I forgot to specify that the body should be an EXCACT replica.

Now what do you, ship the body back… who pays for that? How could you have ever had the foresight to predict you would have all these problems so that you could have put them in writing?

Let’s face it you can’t have the foresight to have everything in writing.

For me, when I ordered a custom tubular chassis, I put it in writing... that this custom “Rolling Chassis” would fit my Diablo body. It would have a Chevy engine, Hewland transmission, the racing cooling system, the list goes on. We talked about all the features that I would want, some of it was in writing and a lot of it was conversation that we agreed on… come on, it’s a rolling chassis, we all know what that means. I give him the deposit, and away we go

At first, lots of progress was made, so I paid my second installment check. On the third month, I get a phone call informing me that they have just received my motor and transmission and are waiting for me to deliver the tires. They will be finish with my chassis two weeks after they receive my tires. Since they are almost done, they wanted my third payment check to cover the cost of the engine, transmission and all the other parts that they had bought. Seemed fair, so I paid the large amount for the majority of the money that I owed.

I had the tires delivered, and then waited for the chassis to be completed, but this never happened. After a year of promises and lies of countless date of when the chassis would be finished, I finally hired a lawyer. The first thing the lawyer wanted was to view all the documents and invoices.

I have everything in writing, I have been honest and I am getting ripped off. I know that I am in the right because I have paid a lot of money for something and have not seen the results of for what I asked for and paid for.

With the help of my lawyer I did get my chassis back, but it was NOT what I ordered. It’s a metal chassis frame with the suspension (that I supplied), with the wheel attached… this is not the “rolling chassis” that we agree on. I have no engine, transmission, and this it is not what I have in writing that defines a “rolling chassis”.

My attorney looks over the written agreement and tells me, alto we have it in writing that there would be an engine, transmission and all the rest of the parts… it never said “who” would pay for these items. Therefore it can be interrupted that I was going to supply these parts, and that I just paid 18K for a steel frame. The invoice and my checks are for an installment of a chassis, the lawyer is correct… no where does it say “who” would supply these parts, only that the chassis was built “for” these parts.

Even when it is in writing, it was not enough written detail… so how much can you write when you really don’t know all the details of what is really needed and should be specified.

I don’t have the answer, I look back and I didn’t specify the welding details, primer paint that should have been used, how many coats of primer and what kind of quality the weld and paint should be fabricated to... the list of details can go on and on. You wouldn’t think this would be necessary, you are trusting that the fabricator is putting his reputation on the line.

Be careful of what you are purchasing, and what you are asking for… take the time to get as much in writing as possible. Make the manufacture write you what they are delivering. Don’t just except the answer of… “I’ll make your car better then Dales…”. We all know that Dale has a great car, but the court system doesn’t know Dale and can not compare it to anything.

When dealing with a written contract

A court will almost always treat the contract's terms as the final, complete contract. The court usually will not even consider oral promises that are not in the contract. The main exception to this is when oral promises are used fraudulently to induce one party into signing the contract in the first place. That is, the party is persuaded by the fraudulent oral promise to enter into a contract he or she otherwise would have avoided. The general rule prohibiting evidence of oral promises in all other cases protects both parties, since they know that once they sign the contract, they have clearly and finally set the terms.
Don't be swayed if the salesperson orally promises you an extended warranty or a full refund if you're not completely satisfied. Get it in writing.
Written and Oral Contracts

Some people mistakenly believe that an oral contract isn’t worth the paper it's printed on. But many types of contracts don't have to be written to be enforceable. An example is purchasing an item in a retail store. You pay money in exchange for an item that the store warrants (by implication, as discussed later) will perform a certain function. Your receipt is proof of the contract.
As with a written contract, the existence of an oral contract must be proved before the courts will enforce it. But as you can imagine, an oral contract can be very hard to prove -- you seldom have it on video. An oral contract is usually proved by showing that outside circumstances would lead a reasonable observer to conclude that a contract most likely existed. Even then, there is always the problem of what the terms of the oral contract were.

Although most states recognize and enforce oral contracts, the safest practice is to put any substantial agreement in writing. Get any promise from a salesperson or an agent in writing, especially if there already is a written document that might arguably be a contract covering any part of the same deal. If the court concludes that the parties intended the written document--a handwritten "letter of agreement" or "understanding," an e-mail, or even an order form--to contain all its terms and be a complete statement of all understandings between the parties, then the court will be very hesitant to add words or terms to the document. This is the important parole evidence rule, under which courts typically look only to unrefuted (uncontested) testimony to help them "fill in the blanks" of a contract. Anything not in that written contract would be deemed not to be part of the deal.

Writing down the terms of a good-faith agreement is the best way to ensure that all parties are aware of their rights and duties -- even if no party intends to lie about the provisions of the agreement.

Having said that, know that there are some contracts which are completely unenforceable if they're not in writing. This requirement, which exists in varying forms in nearly all the states, had its origins in the famous statute of frauds, an English law dating from 1677. It refers to "frauds" because it attempts to prevent fraudulent testimony in support of nonexistent agreements. In most states, the courts will enforce certain contracts only if they are in writing and are signed by the parties who are going to be obligated to fulfill them. These contracts often include:

any promise to be responsible for someone else's debts -- often called a surety contract or a guaranty; one example would be an agreement by parents to guarantee payment of a loan made by a bank to their child
any promise, made with consideration, to marry (though this rule has been eliminated in many states)
any promise that the parties cannot possibly fulfill within one year from when they made the promise
any promise involving the change of ownership of land or interests in land such as leases
any promise to pay a broker a commission for the sale of real estate
any promise for the sale of goods worth more than $500 or lease of goods worth more than $1,000 (the amounts may vary from state to state)
any promise to bequeath property (give it after death)
any promise to sell stocks and bonds (this provision is eliminated in some states)

Some states have additional requirements for written contracts. These statutes are designed to prevent fraudulent claims in areas where it is uniquely difficult to prove that oral contracts have been made, or where important policies are at stake, such as the dependability of real estate ownership rights. Promises to extend credit are often in this category. One typical area of state regulation is automobile repairs; many states require that estimates for repair work be given in writing. If they aren't, and the repair is done anyway, the contract may not be enforceable, and the repair shop may not be able to get its money if the customer disputes authorizing the repairs.

Where a written contract is required, a signature by the party to be charged -- that is, the person whom the other party wants to hold to the contract -- is also necessary. A signature can be handwritten, but a stamped, photocopied, or engraved signature is often valid as well, as are signatures written by electronic pens. Even a simple mark or other indication of a name may be enough. What matters is whether the signature is authorized and intended to authenticate a writing, that is, indicate the signer's execution (completion and acceptance) of it. That means that you can authorize someone else to sign for you as well. But the least risky and most persuasive evidence of assent is your own handwritten signature.

Incidentally, hardly any contracts require notarization today. Notary publics or notaries, once important officials who were specially authorized to draw up contracts and transcribe official proceedings, act now mostly to administer oaths and to authenticate documents by attesting or certifying that a signature is genuine. Many commercial contracts, such as promissory notes or loan contracts, are routinely notarized with the notary's signature and seal to ensure that they are authentic, even where this is not strictly required. Many technical documents required by law, such as certificates of incorporation and real property deeds, must be notarized if they are going to be recorded in a local or state filing office.

Here are some web site links to help you gain more information:

http://www.wellsfargo.com/biz/products/resources/advisor/archives/2when/2when.jhtml

http://www.zardoz.net/people/rmacd/rare/text/ch15.htm

http://biz.findlaw.com/book/lg_contracts/articles/20..html

Priority Points - by Fletch

Here is a little of my mechanical design strategy when it comes to building a prototype (or in this case a car). I find that I need to bring this Priority Points list out when ever a new Marketing guy comes to me with a new product idea.

With ANY new project you should always make a list of priorities. There is always a list of design objectives when it comes to building anything or designing, here are some of these Priority Points:

Costs (spend or save)
Time to Market (or finish of build)
Safety (and other motor registration laws)
Quality / Reliability
Knowledge / Resources

As you work with these points of in your final build you have to prioritize them. For example, if you want the car built quickly, then the number one thing on your priority list will be Time to Market (or finish of build). As a direct result of that what will be your next choose? Costs, Quality??? You have to choose, if your next priority is quality, then that will mean more cost, if you had picked cost as are second priority then your quality will suffer.

Another good example is cost, if you don't have a lot of money for your project then you must identify that saving Costs as your first Priority Point. With little money, what will be your second choice… a good quality car, or allowing it to take many years to complete? You might feel that the Fiero chassis is safe enough for your needs, or maybe you feel that you might want some extra reinforcing (that would require a sub-frame). You might be extremely knowledgeable about engines, but will need to have extra help in your body work... or if you are not knowledgeable but are willing to learn body prep, then your costs will go down, but your quality might suffer. You can see that everyone's priorities are different, and where will you make your compromises?

My Car's Priority Points:
For my car I picked Safety as my highest priority, what if I were in an accident… with the car made only out of fiberglass (as an eggshell) the only other thing that is going to hold you in and not allow you to get crushed is the chassis frame and roll bar. I don't know how you can even think of driving your car without asking yourself, "how is my car going to hold up in a side impact crash (getting t-boned)"? I have not seen a kit yet with the design of side impact doorframe, even the real Diablo has very little side impact. The Diablo is a low car, which means a normal cars bumper is about shoulder level… will you survive??? That is why I have spent the extra money to have a frame built to with stand a crash, in the same respect that NASCAR car would. My doors will have a side impact doorframe, even if this means that the windows will not operate... (again showing that my first priority "safety" over rides anything else).

Right from the start of this project I knew I was in no hurry to finish it, so "Time to market (or finish of build)" is the last thing on my list.

Quality would be second on my list, I believe that if you have the best quality products then you will have the best reliability. I want a car that looks like the real thing!

My biggest dilemma is the "Knowledge / Resources". I don't have that much knowledge about cars, but at the same time I want to do a lot of the work myself to learn. By doing the work myself, I do not want to compromise on the quality. I have learned a lot by watching Lance build my chassis frame, things that I would have never have thought of... so I am learning a lot, but unfortunately to have quality as my second choice, I am having to farm out a lot of the work to be done by other resources (professionals). I hope you can see that my having your priority point list set, that this will help you build your car.

Cost is not a very high priority point for this car project (meaning that I am in a time in my life where I have the extra money to spend on this project). Since I am in no hurry to have this car built, I can shop around for the best prices, and whenever possible buy the best parts or products. I know that I am compromising on cost, having to pay more for safety (with a tubular frame).

The end result should be the safest car possible, with the best quality workmanship and parts, knowing that I will have to spend a lot more money with safety and quality and I also know that my car will not be completed for many years (it is a hobby).

You should make a list of Priority Points to help you better understand what is important to you, I hope this helps.

From KitCar.com

BE SMART, PROTECT YOURSELF
This is common sense stuff, but it's worth repeating.
1. Never buy a kit from a company that doesn't return your phone calls or e-mails, even if you just have to have their kit.
2. Never buy a kit from a company that wants a 100% downpayment.
3. Never buy a kit from a company that doesn't accept credit card payments. Most credit cards are covered by some type of consumer protection just in case anything were to come up.

The following information (in the Red outline) is from the Diablo Support Forum.

Great Advice

CrashRat
New Member posted 29 June 2002 11:57 AM
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building one of these cars requires an amazing array of individual skills/talents. One of those skills is contract management. It seems pretty generic for replica companies to ask for 50% payment up front with the remainder due upon completion. Remember that terms are always negotiable; the company is giving you their 'offer', you can come back with your counteroffer. So long as you're fair and respectful about the process you should never have somebody become angry with you or refuse to negotiate their contracts with you (If they do, accept it as a warning sign and back away until you get more information on the company). I also take notes of various problems people on this list have encountered in their purchase, so that I can include countermeasures in my contract offer when my time finally comes to purchase a body. Here are a couple of rules for writing effective contracts and getting what you want when you want it:

1) KEEP IT OBJECTIVE-the less grey area there is, the less room the company has to dispute later if/when they haven't met your terms.

2) DON'T BE AFRAID TO ASK FOR SPECIFICS-you want your kit and all manufacturer-supplied materials delivered by ___________ date, with all conditions of this contract acceptable to the buyer (make sure your conditions are reasonable, of course). You will provide payment in full upon successful completion of contract. If contract date is not met as a result of manufacturer shortcomings, determine a daily penalty.

3) USE AN ESCROW AGENT-costs you a bit more, but now you have an objective mediator who will make sure every term in the contract is met by both sides before any money exchanges hands. This should gain respect in the manufacturer's eyes as well because it shows you intend to honor your word.

4) CHARGE TO YOUR VISA CARD-now you have a recourse in case things still haven't gone your way.

5) MAKE THEM WORK FOR THEIR $$$-negotiate to pay less up front. Make sure you leave them with enough $$$ to cover their manufacturing expenses, but tight enough that they still need the rest of your money before they've made any profit on the deal.

I'd say if you're still inconfident about managing this part of your build, spend a couple hundred $$$ on an attorney to work this part out with you. Sure beats getting screwed out of several thousand dollars, or waiting 20+ months for all your pieces to arrive.

Greg

wrkitcars
Member posted 13 July 2002 08:30 AM
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For all the rest of you, heres a few tips when dealing with any kit car company

0) Go down and visit the company you wish to deal with, make sure you know how they operate and what you get with your purchase. document everything with pictures.

1) Get everything in writing,all of it.
a) good idea above to have attorney look it over.
b)never take anything for granted, get it in writing, even ask for written delivery date.

2) When sending cash type of deposits, send through U.S. Postal Not FedEx, UPS etc. etc. U.S. Postal allows you to claim postal fraud. This is a federal offense and gets the feds on your side.

3) When using major credit cards, offers you the opportunity to challenge/dispute a charge. (important note is that most challenges are only good for 60 (may vary card to card) days from date of charge. There are several ripoff companies that count on that. They will delay you for the 60 days and then the money is Theirs)

4)use common sense, if you get a bad feeling, just dont deal with them.

Using a Credit Card

-man95ex
Member posted 25 July 2002 07:55 AM

Kinda new to this but can someone help me with this question? With so much fruad out there, why would anyone not use a credit card to buy a kit or turnkey from some of these guys who are causing problems within the industry? At least u have some recourse and backing in that regard. If the company does not accept credit card payments, why would u bother doing business with them ?
Heck in fact if they don't they are not a company in my estimation.

Just a thought, although i am sure this has probably been discussed before lol. Just curious as to what you guys have to say.

Duncan
Administrator posted 25 July 2002 05:14 PM

I guess if you pay it off the day you use it, and can fit a $XX,000 purchase on it, and the kit manufacturer will accept a credit card.
Merchants might not accept them since they have to pay a few % to the merchant bank.

Escrow is basically the safest way to disburse funds over time when goals and deliveries are involved. It requires a greater understanding of what is to be delivered and when. It's more complicated though, in terms of organization and fees, etc.

When I picked up my IFG kit, Ray simply offered to reduce the price of the kit by the amount of the missing parts. I could then just buy the parts when they were ready.

vassago
New Member posted 26 July 2002 09:46 PM

As someone who has a merchant account, the person accepting the credit card is paying between 3%-5% for offering the option to you. That means, on a $10,000 transaction, they have to pay the credit card company $300-$500. And no, they cannot legally pass this fee on to you.

You should look at these Consumer Alert Web pages for updates on different manufactures.

Diablo Builders Support Centre

KitCar.com

Although my information comes from various builders and sources, if you want any information contact me. The photographs used on this site are used with permission, if you want to use any, contact them through the various links on this site. I did and you can see the results!