In custom jewelry project, contract is indispensable
By Suzan R. Flamm, Esq
The following case study, loosely based on several actual cases to illustrate the pertinent issues, reveals the pitfalls that can bedevil a custom jewelry project, as well as the precautions that jewelers can take to salvage such transactions.
Case facts
A customer seeking a 50th wedding anniversary gift for his wife was referred to an experienced local jeweler. He wanted a ring set in both white and yellow gold, combined in a way that would represent a long and loving marriage, with a diamond center stone surrounded by five birthstones, each of which would represent one of the couple's five children. The jeweler immediately envisioned several possible designs for the ring, and quickly sketched a few for the customer. Excited by the jeweler's initial ideas, the customer commissioned her to design and make the ring.
The jeweler discussed her design fees, gave the approximate cost of materials, and mentioned that a deposit would be required and that custom work could not be returned. Interested in proceeding, the customer paid the deposit with his credit card and signed and received a receipt for the deposit, which included a notation that custom work was not returnable.
As suggested, the customer returned the next week, and spent a long time reviewing the more detailed drawings the jeweler had prepared. He made a preliminary decision on one of the designs, but said he would return with his daughter before making a final choice. The customer and his daughter studied the options the following day, both agreeing on his initial selection, and on the ring's $17,000 price tag. The jeweler asked the customer to sign the drawing as well as a contract, which promised delivery of the ring within three weeks. The customer made an additional payment with his credit card towards the total cost and, again, signed a receipt.
All three documents--the drawing, the contract and the receipt--stated that the ring was a non-returnable custom piece.
At the jeweler's suggestion, the customer returned to the store the next week to see a prototype of the ring, as well as the gold and gemstones that the jeweler had selected. The client approved the materials and signed an agreement to that effect, which again stated that custom work was not returnable.
The jeweler finished the ring within the three-week period. The customer picked it up and later presented it to his wife. Shortly thereafter, the client was back in the shop with the ring, disappointed. His said his wife felt that the ring was far too big for her small hand.
The jeweler told him that the ring could not be returned, adding that she had made him aware of this several times during the process. The customer left, disgruntled.
Soon thereafter, the jeweler received a notice from her credit card company stating that it was investigating the ring transaction and requesting documentation on the sale. The jeweler asked the Jewelers Vigilance Committee (JVC) to help mediate a fair resolution.
The law
Basic contract law governs the transaction between the jeweler and her customer. Essentially, a contract is an agreement with specific terms in which there is a promise to do something in return for a benefit, known as a "consideration."
In a typical jewelry contract, the jeweler promises to sell a product at a specific price, indicated on a sales tag. The customer accepts by agreeing to the price and paying the jeweler. While a contract does not have to be written to be enforceable, the better practice is to include all contract terms--including a description of the article, the price and the return policy-on a written receipt. If the stated return policy allowed exchanges but not money back, then the customer would be bound by that contract term. On the other hand, if the jeweler described the product as being made of 18-karat gold, and it was in fact made of 14-karat gold, that would be a breach of a contract term, and the customer would be entitled to his money back regardless of the stated return policy.
Conclusion
In this case, because of the jeweler's careful paperwork, the terms of the contract were very clear. She and the customer agreed that: 1) The jeweler would design and produce a ring that met the customer's specifications. 2) The ring would be produced by a certain date. 3) The customer would pay a total of $17,000 for the ring.
4) Because it was a custom piece, the ring was not returnable.
The dissatisfaction of the client's wife, while unfortunate, did not alter the terms of the contract, which listed no exceptions to the no-return clause. The jeweler, who, in fact, had to invest time and money to create the one-of-a-kind piece, would never have agreed to a contract conditioned on the approval of a third party, such as the customer's wife.
At the jeweler's request, JVC participated in her communications with the credit card company. Predictably, her meticulous paperwork spoke for itself. There was nothing ambiguous about the important terms, and the customer's consent to those terms was evident from his signature on several documents. There was no question that he understood that the ring would be custom-made and that no refund was available. The law was clearly on the side of the jeweler, who prevailed with the credit card company.
JVC contacted the customer and explained the mediation process, as well as the law that governed the transaction. A refund in this instance was not only contrary to the terms of the contract between the parties, it would also be unfair. The customer ultimately reached the same conclusion and accepted the jeweler's offer to attempt to sell the ring on a consignment basis. Knowing that the customer had several daughters, the jeweler also offered to design a piece for each, using the materials in the custom ring, at a reduced cost. The customer was appreciative, and is considering the offer.
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