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Payment due in notice period of contract

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    Payment due in notice period of contract

    Hi, not sure if this is an appropriate forum for this, but found you through google and hoping someone can give me some advice. I'll try and avoid this turning into an essay too but a little bit of background is needed.

    There are 4 companies involved. Company A has a large contract with Company B for B to provide a raft of services to A.

    B found that it was struggling to provide one of these services, and so I set up Company C as a sole trader to provide this service to B. The contract drawn up states that C would receive total and exclusive handover of all of this element of the work from B in return for completing it at a rate that meant B was not losing any money on it (they had agreed a very low rate which was why they couldn't complete it on cost in-house, whereas C had a different setup allowing a small profit). This work was piecemeal, and the payment was due per piece rather than per hour or anything like that.

    6 months down the line B cancelled the contract with no notice to give the work to Company D (despite the contract between B and C stipulating a 60 day notice period). When C pointed out the notice period and exclusivity clauses B agreed to pay C for the notice period as if the work had still been completed by them.

    C agreed to this as is reasonable, and calculated a daily average of the number of pieces completed each day over the full duration of the contract so far, then multiplied up by 60 to get the payment in lieu of this notice period.

    B have now come back and said that this average figure is a sticking point, and that they want to only pay C for however much work is actually done by D during the 60 days covered by the notice period.

    This raises a few problems that I would like advice on if possible:

    1) C has no access to A, B or Ds systems (nor does it want/expect it). How can C ensure that the figure it is told for the work completed during the 60 days is accurate, and hasn't been artificially reduced to save on costs.

    2) The cancellation came half way through a month, and I assume that like with C, D is invoicing monthly. How can C ensure that the work is broken down in enough detail for an accurate assessment of work completed if D invoices for, say, 120 pieces in a month where C is only due 11 days of that month?

    3) It is possible (though I don't know if I should expect it or not) that B will go back to A and ask for work to be delayed if not urgent until after the notice period finishes. This way B doesn't have to pay twice for work that can wait until after the notice period ends, even if that work would otherwise have been sent during the notice period if this situation did not exist.

    So my basic question is can C (me) insist on the average charge as calculated given the above difficulties, or if not is there any way in which C can claim any right to visibility or disclosure for the work as completed during the notice period (which would still not completely solve problem 3 as the arrangement could be made via telephone with no written proof)

    As I said hopefully I'm putting this into a relevant place, and thanks in advance for any assistance anyone can give, even if that is only to redirect me to somewhere more appropriate for my questions.

    #2
    I lost interest at "B found..."
    Blood in your poo

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      #3
      I got to 'and so I set up Company C as a sole trader' and knew this wasn't going to go well so I left it there.
      'CUK forum personality of 2011 - Winner - Yes really!!!!

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        #4
        You need professional help - not the medical type!

        Seriously, go to a legal firm and get advice from them. It's too complicated and we can't see the contracts between all of the parties.

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          #5
          Originally posted by RasputinDude View Post

          Seriously, go to a legal firm and get advice from them. It's too complicated and we can't see the contracts between all of the parties.
          I'll second this, see a solicitor but get a quote first. It looks like a case where the parties will need to negotiate an acceptable amount as there are many parties involved. Make sure any associated costs don't outweigh the final payout. Good luck.
          http://www.linkedin.com/in/sallyfletcher

          Comment


            #6
            Originally posted by RasputinDude View Post
            You need professional help - not the medical type!

            Seriously, go to a legal firm and get advice from them. It's too complicated and we can't see the contracts between all of the parties.
            Company E? Is that wise?

            The story does beg the question: how much money is 60 days' notice if no pieces have been completed?
            Last edited by speling bee; 17 October 2012, 18:43.
            The material prosperity of a nation is not an abiding possession; the deeds of its people are.

            George Frederic Watts

            http://en.wikipedia.org/wiki/Postman's_Park

            Comment


              #7
              It's a bit of a tricky situation because you are basing your claim on past performance of the contract and the company wants to settle based on future performance. The trouble is that there really isn't any way to see what they are scheming, they may have a huge order waiting to fill or they may be genuinely winding things down.

              Agree with Sally, you will have to get a contract lawyer to consider existing case law and advise you if you have a case or if you should settle. Really difficult to judge without seeing all the details.
              Free advice and opinions - refunds are available if you are not 100% satisfied.

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