material mark up without doing the work

Fred B

Senior Member
Location
Upstate, NY
Occupation
Electrician
Markup covers the time ordering/picking ip/delivering materials, as well as warranty issues. It's not "either/or"

But any markup earned for legwork has been dissolved by leaving the GC in the precarious position of having to find a replacement.

It'll take time, which amounts to money
That's new one for me, never considered, got to increase my MU I guess.
Don't disagree with second statement if the EC is the one who backed out.
 

d0nut

Senior Member
Location
Omaha, NE
While all of the responses are valid, the actual answer is you should pay (or expect to get paid) whatever your contract states is required when the agreement gets broken. The answer to your question should be in your contract, and if it isn't, you should make sure it is in the next contract.
 

gadfly56

Senior Member
Location
New Jersey
Occupation
Professional Engineer, Fire & Life Safety
The sub has been paid for the cost of material but not his mark up. The material was special order and took about 5 months so I was in a place to refuse delivery.

At any case, I was not willing to pay the mark up fee (because he left me hanging) and seems like most of you are confirming my decision.

Thanks again.
That is very important information you failed to provide initially. Special order equipment is not something a sub can simply take back and move to the next job like a few hundred feet of 2" rigid. The sub is due the full value, including profit, of the material. No one is in business to move material from point A to point B just to break even. You might as well put your money in the bank. I understand you may feel ill-used and have been placed in a bind, but it doesn't sound like the EC had any choice. If he doesn't have a crew, he can't do your work. If he's smart, there is a force majeure clause in his contract with you that would cover something like this.
 
The material was special order and took about 5 months so I was in a place to refuse delivery.

At any case, I was not willing to pay the mark up fee (because he left me hanging) and seems like most of you are confirming my decision.

Thanks again.

That is very important information you failed to provide initially. Special order equipment is not something a sub can simply take back and move to the next job like a few hundred feet of 2" rigid. The sub is due the full value, including profit, of the material. No one is in business to move material from point A to point B just to break even. You might as well put your money in the bank. I understand you may feel ill-used and have been placed in a bind, but it doesn't sound like the EC had any choice. If he doesn't have a crew, he can't do your work. If he's smart, there is a force majeure clause in his contract with you that would cover something like this.

Yeah that could change things a bit. Personally I prefer not to use other peoples material mostly because it can just be a hassle and im kinda particular about certain products, but if its special order stuff I would probably be willing to be flexible. Did the EC have to do any design work? If so did he charge for this time or would he have been paid by the markup? This can not be an insignificant amount of time. Right now Im sourcing a CT cabinet and some factory panelboards for a few jobs and its not an insignificant amount of time to do this for sure.
 

Todd0x1

Senior Member
Location
CA
If he's smart, there is a force majeure clause in his contract with you that would cover something like this.

I think a force majeure clause would have to enumerate 'labor shortage', and it would still be subject to dispute. What constitutes a labor shortage? Sub can't get anyone because there is no one available at any price? Sub can't get anyone at a price which allows him to keep the job in the black? Sub can't get anyone because no one wants to work for him? Maybe the first one is covered, the other two are the sub's problem imo.
 

petersonra

Senior Member
Location
Northern illinois
Occupation
engineer
Like many questions asked here, the original poster chose not to provide a complete picture of the situation until it was dragged out of him. This is one of those things where the situation should have been covered in the contract.

My suggestion would be to offer to purchase the materials from him that have been delivered at his cost. Electrical contractor has screwed over his customer and shouldn't profit from that situation.
 

brantmacga

Señor Member
Location
Georgia
Occupation
Electrical Monke
The sub has been paid for the cost of material but not his mark up. The material was special order and took about 5 months so I was in a place to refuse delivery.

At any case, I was not willing to pay the mark up fee (because he left me hanging) and seems like most of you are confirming my decision.

Thanks again.

So here’s the thing; this isn’t that uncommon, at least in my segment. We take over jobs sometimes, and have to give up jobs sometimes. But I wouldn’t have released fixtures to you without my O&P on top. Your sub can’t eat them, and you don’t have 5/mo to lose, so there is negotiable middle ground.

I think what’s most bizarre is that the EC gave you the actual cost. As I mentioned earlier, the cost would’ve been whatever was listed in the payment schedule, which should’ve included O&P.


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jaggedben

Senior Member
Location
Northern California
Occupation
Solar and Energy Storage Installer
If I was contracted to do a project for $$$ and decide to pull out because I don't have the man power, (last minute losing employees and now you have to find an electrical contractor who will do the job) but do my due diligence that material arrives on site and I ask you for the cost of the material plus my mark up $4000 will you pay the mark up?

Thanks for your input

What they all said...

See, the thing is, 'I don't have the man power' is actually not a legally valid reason to withdraw from a contract in the state of California, where I gather from your profile this happened. So if this job was indeed properly contracted, not only do I not pay you the markup, maybe I sue you for breach of contract instead, since it will no doubt cost me more now to get the job done. And in fact if I just take your materials and don't pay you anything, your only recourse is to file a lien for the cost of the materials. But in order to actually perfect the lien and get paid on it, you'd have to take me to court, (which you can't afford to do, so maybe arbitration instead). And the judge, er, arbitrator will likely agree that since you are in breach of contract you owe me something that should be subtracted from whatever I would have owed you for the materials, which depending on how much I can show I lost may be more than the materials themselves.

So... if I offered to pay you the cost of materials minus your markup, you'd better consider that I'm being very generous because I understand how difficult the labor market is to deal with right now, and you should take me up on that offer and hope that I don't badmouth your name to anyone I know who works in the same business and for whom you might want to work in the future.

:)
 

edward

Senior Member
Location
CA
Occupation
Electronologist
Like many questions asked here, the original poster chose not to provide a complete picture of the situation until it was dragged out of him. This is one of those things where the situation should have been covered in the contract.

My suggestion would be to offer to purchase the materials from him that have been delivered at his cost. Electrical contractor has screwed over his customer and shouldn't profit from that situation.
The details of the contract was $$$ for the project. He decided not to do the project due to lack of emplyee he backed out of the contract.
He delivered the material an now wants the mark up that was built into the original contract.

In the contract there was no specific clause that the cost of material is $$ + mark up.

The material has been delivered and he is paid minus the markup.
 

edward

Senior Member
Location
CA
Occupation
Electronologist
What they all said...

See, the thing is, 'I don't have the man power' is actually not a legally valid reason to withdraw from a contract in the state of California, where I gather from your profile this happened. So if this job was indeed properly contracted, not only do I not pay you the markup, maybe I sue you for breach of contract instead, since it will no doubt cost me more now to get the job done. And in fact if I just take your materials and don't pay you anything, your only recourse is to file a lien for the cost of the materials. But in order to actually perfect the lien and get paid on it, you'd have to take me to court, (which you can't afford to do, so maybe arbitration instead). And the judge, er, arbitrator will likely agree that since you are in breach of contract you owe me something that should be subtracted from whatever I would have owed you for the materials, which depending on how much I can show I lost may be more than the materials themselves.

So... if I offered to pay you the cost of materials minus your markup, you'd better consider that I'm being very generous because I understand how difficult the labor market is to deal with right now, and you should take me up on that offer and hope that I don't badmouth your name to anyone I know who works in the same business and for whom you might want to work in the future.

:)
I agree.

I posted the question seeking advice as to what you all as business owners would do and I got the answer that I thought I would get.
 

Strathead

Senior Member
Location
Ocala, Florida, USA
Occupation
Electrician/Estimator/Project Manager/Superintendent
I guess what is more important is what your contract says. A Construction lawyer would be a better person to talk to than us, but I would expect your contract has a clause for failure to perform. That is what your sub did. He is "entitled" to his costs on the job, which would include markup on the material, but if your contract is typical, you are entitled to not pay him a penny until the job is finished, and any costs to you over his contract amount should be deducted from his payment, and if it is negative, then he still owes you money.
 

brantmacga

Señor Member
Location
Georgia
Occupation
Electrical Monke
I agree.

I posted the question seeking advice as to what you all as business owners would do and I got the answer that I thought I would get.

You got the answer you wanted by leaving out details. I asked twice if it was fixtures and you never answered that. Once everyone realized it was fixtures, the answers changed.


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oldsparky52

Senior Member
What they all said...

See, the thing is, 'I don't have the man power' is actually not a legally valid reason to withdraw from a contract in the state of California, where I gather from your profile this happened. So if this job was indeed properly contracted, not only do I not pay you the markup, maybe I sue you for breach of contract instead, since it will no doubt cost me more now to get the job done. And in fact if I just take your materials and don't pay you anything, your only recourse is to file a lien for the cost of the materials. But in order to actually perfect the lien and get paid on it, you'd have to take me to court, (which you can't afford to do, so maybe arbitration instead). And the judge, er, arbitrator will likely agree that since you are in breach of contract you owe me something that should be subtracted from whatever I would have owed you for the materials, which depending on how much I can show I lost may be more than the materials themselves.

So... if I offered to pay you the cost of materials minus your markup, you'd better consider that I'm being very generous because I understand how difficult the labor market is to deal with right now, and you should take me up on that offer and hope that I don't badmouth your name to anyone I know who works in the same business and for whom you might want to work in the future.

:)
+1
 

cdslotz

Senior Member
The sub has been paid for the cost of material but not his mark up. The material was special order and took about 5 months so I was in a place to refuse delivery.

At any case, I was not willing to pay the mark up fee (because he left me hanging) and seems like most of you are confirming my decision.

Thanks again.
Have you terminated the contract? Was there a PP bond required?
If the EC bailed on his contract, you have to file on his PP bond to get the job done, which would include all of the costs involved in making this change, including a higher price to get an EC to finish.
 

edward

Senior Member
Location
CA
Occupation
Electronologist
You got the answer you wanted by leaving out details. I asked twice if it was fixtures and you never answered that. Once everyone realized it was fixtures, the answers changed.


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The material is custom order for the job.

He does not have any skin in the game anymore. Now as the GC I am holding the bag and the full responsibility is on me.
 
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