Credit Checks

[garethevans1986]

1 - Who here credit checks their pimps?

2 - I've been offered a new contract with Lockheed Martin via an agency, I credit checked them earlier (we use CreditSafeUK) and it's come back as "17 - Cash Transactions" because it's that low.

So I went down the route of getting a Director of the agency to sign a Directors Guarantee and completing a Credit Application document - which went down like a lead balloon but I hit a nerve when I sent the screenshot of the credit rating to the director and two their staff.

The agency have now put a clause in the contract saying that if the agency cannot pay, then the parent company will do (they have a better credit rating thank god).

How would I legally stand if they couldnt pay the invoice, bearing in mind the agency director isnt a director of the parent company.
Has anybody else had something similar?

TL;RD
1 - Do you credit check your pimps?

2 - Agency have a tulip credit rating, I try to get agency director to sign a Directors Guarantee and Credit Application form. Agency Director isnt happy and changes contract so that if the agency cant pay our invoices their parent company will.

Thanks
GE

[d000hg]

Why would a clause in the contractor-agency contract saying "the client will pay" be worth anything, when the client isn't involved in this contract? You would surely need something from the client directly?

[jamesbrown]

The agency have now put a clause in the contract saying that if the agency cannot pay, then the parent company will do (they have a better credit rating thank god).

The only reason they've done that is because: 1) they think (hope) you're an idiot; and 2) it's completely vacuous and unenforceable. What are the payment terms? As a minimum, they'll need to be tight but, TBH, it's a risk.

Edit: oh wait, by "parent company", do you mean the client or another corporate that owns the agency?

[TheFaQQer]

1 - Who here credit checks their pimps?

Never have done.

How would I legally stand if they couldnt pay the invoice, bearing in mind the agency director isnt a director of the parent company.

They don't need to be a director of the parent company - but they do need to have the legal authority and capacity to sign the contract on their behalf.

I suspect in this case, they haven't got the authority to do that - it would bind a third party who are not privy to the contract to it, so I doubt that you would have any legal comeback if it all went wrong.

The only thing you can do is to make sure you have some kind of protection in place (eg. IPSE+ membership, which gives you insurance against the agency going bust - if you aren't a member then you can use my code to get £10 at Amazon or iTunes if you join), and make sure the invoicing and payment terms are very short.

[NickFitz]

Why would a clause in the contractor-agency contract saying "the client will pay" be worth anything, when the client isn't involved in this contract? You would surely need something from the client directly?

Read it again. The OP doesn't mention the client at all, just the agency and the parent company of the agency.

[jamesbrown]

Read it again. The OP doesn't mention the client at all, just the agency and the parent company of the agency.

For some reason, I read it the same way, but it is, indeed, clear that the OP is talking about the parent company of the agency. I think the answer is the same, though, as the parent company will be a separate legal entity and the contract is not with the parent company.

[garethevans1986]

Thank you for some sensible answers.

We're with the FSB so I'll be giving their Legal department a ring tommorow. I had a gut feeling that the contract clause wouldn't fly.

The Payment Terms and Timesheets are weekly.

Thanks

[AMH]

so at worse they get a weeks work out of you for nothing.
Is that better than having no work for the next 2 weeks?

[garethevans1986]

True.

[TheFaQQer]

The Payment Terms and Timesheets are weekly.

For a couple of weeks exposure, it could be worth the risk - particularly if you haven't got anything else on offer.

As I said above, if you are an IPSE+ member, then you get business interruption insurance of up to £10k + VAT if the agency goes bust.