EAZY'S GARAGE

DRRC Version$*$

Confidential Information for Jim Eazer, Gas Station Owner

You have owned your own gas station for $33$ years. Jack Calhoun, a young mechanic, began working for you three

years ago. He has always been skillful and reliable.

Frances Litchfield, a dentist, has been a steady customer since she first owned a car. Indeed, the Litchfield family

have been customers for as long as you have owned the gas station, although there are fewer Litchfields in town now

than there used to be$.$ That has been especially true since the death, a few years ago, of Frances' uncle, Tom, with

whom you went to school.

One week ago, Frances Litchfield brought her eight$-$year$-$old German car in because it had suddenly become hard to

start and began to run rough. You hurt your back the day before and had been told by your doctor to keep your

hands off cars for a couple of weeks, so you asked Jack to look at Frances' engine. Jack looked the car over for about

$20$ minutes and told Frances that it needed a new emissions control device and a valve job. He gave her a rough

estimate on the back of an envelope:

$ $285\mathrm{.}00$ parts

$ $720\mathrm{.}00$ labor

$$1005\mathrm{.}00$ total

Dr$.$ Litchfield brought the car back the next day to have it fixed. The work took longer than Jack thought because of

several rusted bolts that broke. Jack left a message with Frances' secretary that he had had $$some trouble$$ and the

work would take a little longer, but the car would be ready by the end of the next day and working like new. Jack

likes smooth$-$running engines. Jack gave Litchfield this bill:

$ $310\mathrm{.}00$ parts

$$1200\mathrm{.}00$ labor

$$1510\mathrm{.}00$ total

Litchfield was unhappy with this bill and stormed in to see you. Rather than waiting for an explanation, she started

talking about $$gouging$,$written estimates,$$ and lawsuits. That got you pretty hot, so you wrote a new bill based on

the cost of the job as estimated by the $$Standard Manual,$$ which is used industry$-$wide to set the price of parts and

to estimate the time a job will take. Most mechanics follow this manual in giving both estimates and bills, and you

use

EAZY'S GARAGE $$ Confidential Information for Jim Eazer

$2$

it to bill most of your customers. $($It is only the Litchfields and two or three other families that you, as Jack knows,

usually give a break to$)$:

$ $310\mathrm{.}00$ parts

$$1330\mathrm{.}00$ labor

$$1640\mathrm{.}00$ total

Frances refused to pay this bill and left. But later that night, after the garage had closed, she returned with a spare

key and drove her car away. You called your lawyer first thing the next day. You wanted to file a criminal complaint

for conversion of a mechanic's lien, but he persuaded you not to just yet. The lawyer did, however, call Dr$.$

Litchfield and tell her to consider this possibility.

It appears from talking with Jack that his first estimate was based on the ten hours it generally takes to actually do a

valve job and a Standard Manual estimate of two hours for replacement of the emissions control part $($which is not in

the same part of the engine as the valves$).$ He had expected Dr$.$ Litchfield to take the envelope estimate into the

office and that you would prepare a written estimate and warn her about possible additional charges if the job did

not go smoothly, but while Jack was putting a tool away Dr$.$ Litchfield got into her car and drove away.

The work itself took Jack $20$ hours, $8$ hours longer than he had estimated. Largely, this was due to $6$ rusted bolts on

the manifold head, all of which broke and had to be drilled out, but no doubt some additional time resulted from

Jack's unfamiliarity with the layout of this car$$s engine. Jack's price for parts included an additional $$25$ over his

estimate to cover the cost of the broken bolts and their fixtures. Both Jack's estimate and his bill charged for labor at

the rate of $$60$ per hour. Your rate for most customers is $$70$ per hour.

The second bill, which you prepared, included the retail cost of the parts Jack used and a labor charge at $$70$ per

hour based on the Standard Manual's time estimate for work on the car: $11$ hours for a valve job, $2$ hours to replace

the emissions control device, and $1$ hour each to replace six broken manifold bolts.

Standard industry billing practices are as follows: Most garages charge customers a flat fee for a job based on a

signed written estimate, and require a signed repair authorization form before beginning work. The estimate is based

on retail parts prices and estimated labor times $($which are usually, but not always, on the generous side$)$ given in

any of several $$Standard Manuals$($such as Chilton's$),$ modified by the mechanic's informed judgment. The older

the car, the less reliable the Manual's time estimates because the likelihood of rusted and frozen bolts goes way up$.$

Customers are generally warned of this orally and in the fine print on the repair authorization form. When such

complications occur, the customer is charged a flat fee above the estimate for the additiona