It sounds like you did the right thing. Oh sure this sale wont go through but you also wont be holding the bag when the bad contract tries to bite you in the rear end! I remember when I was a Mechanical Contractor in Colorado Springs that...the single largest bid for a job that I had ever made before...I got it and was awarded the contract. It was slightly over 1 million dollars. I was exuberant after I got the call and we set it to sign the contract the next morning.
But in the morning I was not so happy and already being suspicious. I was a small family operation and while business was good at the time, and I could have handled the contract, I had never done a project this size for my own company before so I knew that there had to be pitfalls going into it. This project was for a 52 unit complex, two 24 unit buildings and a 4-plex also. I realized that I did not have the standing credit that it would take to supply all of the materials and equipment for this job! And they knew that going into it because I had made it very clear to them. So I wondered how that was going to be managed? I am not in the habit of biting off more than I should which may threaten (or could) the livelihood of my family and it's sustenance. And even though I had already provided them with a copy of my contract that I intended to use along with my proposal, I had a feeling that they were going to show up with their own contract!
I was right too. They had a book with them. It was thick for a contract and boy he was shoving it at me with a pen, here, put your John Hancock right here and we'll get started...I said hey, I can't sign this off the cuff. I'll take it home and read it through and sleep on it and give you a call in the morning. He didn't like that but agreed. And I asked him again, how's the material going to be furnished, I don't have that much credit...?? He assured me, no problem at all...(which was a flag to me). I left and before I even had time to get home and read it, he called me back and said we're set to meet at the Carrier supply house tomorrow morning to finalize it.
That contract was loophole city and everything was to roll downhill onto me. I was even supposed to...apply for payment approval to see if I would be able to be approved to be paid! And supply every single zip screw and wire nut used as material blah blah blah. That made me decide, no way. This smells too funny. But the man deserved more than a phone call so I went and met him at the supply house. And he starts right in, ok it's your account here, but to qualify you to carry 50K that the client company was using their credit power as sort of a co-signer thing so I could be granted that much crtedit, and then my payment checks would be sent directly to the supply house where they would take their money owed and give me the rest. Sign here.....
So I asked the Carrier rep, so....just suppose that they do not pay, who do you go after, me or them? Oh, well, you Ed. It's your account. And the client guy starts explaining, they're a big rich company so that would never happen blah blah blah, he didn't sound like the contract read! So I backed out. If they didn't pay, then it would already be way too late for me. So I told him that I'm sorry but I can't take that chance. And I backed out.
Fast forward about 6 months and someone sure got the job because every time I drove past the site, it was going on. I wondered if I had let a good thing go? I ran into a colleague of mine at the supply house and I had it on my mind so I mentioned something about it to him, and he's like I'M doing that job! Then he proceeded to tell me that he has been months into it, the 4plex was done 2 months ago....and he has yet to see a dime from them! Said they're pressuring him to begin the 24 unit buildings, but he was scared to requisition the materials!. The last I ever heard from him about it was that he lost his butt on that job because he never did get paid anything.
...and I've never felt bad about turning down a contract ever again. There are unscrupulous people who do things like that on purpose, and just go from company to company and never pay anyone, and get properties built for themselves.
Flippers and RE people know the ins and outs. Everything that has ever bit him before, he thought ahead and put it on you, just in case. And things do happen, but contracts are contracts. Good dodge, Brother! Everybody's friends...until they're not! The they would staple that contract to your forehead and not give a whit for how it affected you.
(I know that I must be missing something by the way.)
