Late payment of invoices constitute breach of contract?

PAH · 29th September 2008, 18:25

The agency I'm currently contracting through, who appears to be run by the usual run of the mill tossers, owe me shed loads of money, at least two unpaid invoices to date. Every time I contact them to chase it up, they give me the fob off treatment.

The client is keen to keep me on, and has contractors from at least one other agency on site.

Do I have a case for kicking my current agency in the nads and going with a different one without any comeback? Don't particularly want to cut and run from the client seeing as the world's in freefall at the moment, if you believe the news. Though it feels like I'm working for nothing at the moment, so not a lot to lose really.

Any thoughts, ideas? Never had a problem with late/non payments before. I could start charging interest on overdue invoices but doesn't change a thing if they don't/won't/can't pay up, apart from the size of the debt I'll be writing off if it all goes tits up.

SueEllen · 29th September 2008, 18:41

Have you asked for any of the payments in writing yet?

If you did can you prove they got your letters/emails?

BolshieBastard · 29th September 2008, 19:11

You need to tell them in writing that the t&C's between you state payment should be made within x days of signed timesheets being received by them.

Tell them you expect payment into your co's account within 7 days otherwise you'll consider this a breach and will start procedings to terminate the contract and bill the client direct.

Parity messed me about with a couple of payments and I told them the same. They tried to argue the toss but payment was received within 7 days so I was happy. Had no issues since.

PAH · 29th September 2008, 19:21

Quote:

Originally Posted by SueEllen

Have you asked for any of the payments in writing yet?

If you did can you prove they got your letters/emails?

Only by email and phone so far. Usually send the invoice (and any reminders of previous invoices still outstanding) when I email my timesheets.

As they've not asked me to resend any timesheets I can be sure they've received them, they wouldn't have let me slide, but as soon as it's the other way around....

My main worry is if they are in financial difficulty and are unable to pay. Not sure there's any way I can check their current status via a third party.

PAH · 29th September 2008, 19:26

Quote:

Originally Posted by BolshieBastard

You need to tell them in writing that the t&C's between you state payment should be made within x days of signed timesheets being received by them.

Tell them you expect payment into your co's account within 7 days otherwise you'll consider this a breach and will start procedings to terminate the contract and bill the client direct.

Parity messed me about with a couple of payments and I told them the same. They tried to argue the toss but payment was received within 7 days so I was happy. Had no issues since.

I'm going to have to decide how to play it without coming unstuck. Don't really want to get the client involved until I have to, and anything I threaten I've got to be sure I'd be willing to let it progress that way.

I'll have to do some searches on here to see what experiences and outcomes other people have had. I suppose the first thing is to identify how much interest I can charge and threaten them with that to focus their attention, then increase the threats if they still don't pay up.

NotAllThere · 29th September 2008, 19:53

Late payment in and of itself does not usually constitute material breach of contract.

Do what BolshieBastard says, and MAKE it cornerstone of the contractual agreement, and then it may becoem a material breach to not pay on time.

Do charge the legally acceptable admin and interest, won't you?

Another Dodgy Agent · 30th September 2008, 09:55

Quote:

Originally Posted by PAH

I'm going to have to decide how to play it without coming unstuck. Don't really want to get the client involved until I have to, and anything I threaten I've got to be sure I'd be willing to let it progress that way.

I'll have to do some searches on here to see what experiences and outcomes other people have had. I suppose the first thing is to identify how much interest I can charge and threaten them with that to focus their attention, then increase the threats if they still don't pay up.

Think it is breach of contract as your contract should stipulate somewhere a length of time, for example we typically pay within 3 days of receipt of invoice and timesheets (BACS takes 3 days) but our contract stipulates that we will pay within 14 days (to cover us).

Anyhow breach or not, I had this situ occur with one of my clients. They asked me to pick up 5 contractors from another agency because they were fed up with the contractors taking time out of work chasing the "bad" agency. Naturally I was happy to oblige.

This "bad" agency was up to 3 months late with payment to its contractors, turns out it had messed up its factoring and was 'robbing peter to pay paul'. The OP may want to be careful in case said agent is about to go to the wall...

expat · 30th September 2008, 10:15

IANAL but from what I've heard, NotAllThere is spot-on with his emphasis on material breach of contract. Obviously late payment breaches the terms of the contract, but you are not allowed simply to throw it out the window for any old breach.

I.e. a breach of contract on their part does not justify a breach on your part (it justifies action, but the contract is still in place). A material breach of contract on their part is one that is sufficiently serious as to justify you taking the view that the contract no longer exists. Surprisingly, late payment is not in itself necessarily one of those.

BTW Another Dodgy Agent may be more materially on the mark when he suggests that this may be a sign that they are in trouble: their trouble is definitely your trouble!

ratewhore · 30th September 2008, 10:32

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ASB · 30th September 2008, 11:23

Quote:

Originally Posted by expat

IANAL but from what I've heard, NotAllThere is spot-on with his emphasis on material breach of contract. Obviously late payment breaches the terms of the contract, but you are not allowed simply to throw it out the window for any old breach.

I.e. a breach of contract on their part does not justify a breach on your part (it justifies action, but the contract is still in place). A material breach of contract on their part is one that is sufficiently serious as to justify you taking the view that the contract no longer exists. Surprisingly, late payment is not in itself necessarily one of those.

BTW Another Dodgy Agent may be more materially on the mark when he suggests that this may be a sign that they are in trouble: their trouble is definitely your trouble!

Generally correct, but you also have to consider fiduciary duty as a director. In a similar position the advice I got was to withdraw service, and notify the agency accordingly. This was based on the fact that the chasing for the invoices had been unsuccessful and the prospect of it turning into a bad debt was very real.

Anyway result was we went to court, me claiming the invoices and the agency counter claiming non-performance. We won

. Of course I've still got the unsatisfied judgement somewhere because the receivers went in as we were trying to enforce.