Completion bonus and contract extension

[thebluemoose]

Hi,
I'm in the process of negotiating contract terms with a new client. I'm using the standard PCG direct (non agency) contract as the basis for the contract, but the client has insisted on a few extra terms.

I've agreed with the client that in addition to my daily rate, I'll be paid a completion bonus at the end of the contract to the sum of £50 per day. The client is very insistent on this clause as they've had problems in the past with a contractor who disappeared mid-contract leaving them very much in the lurch. I'm ok with this clause, but have a question about how it should be handled with regards to renewals.

The initial contract will be for 3 months, with a very good chance it will be extended to 6 months. I've just received the latest copy from the client, and they only want to pay the completion bonus at the end of the 6 month period if the contract is extended. I'd much rather this was paid at the end of the 3 month period. Here's the exact wording from the contract:

"4.2.2. If the contract is renewed for a further 3 month period following the end of the Initial Period (“Second Term”) then the sum due in respect of the £50 per day contract completion bonus for the Initial Term shall not be invoiced until the end of the the Second Term. For the avoidance of doubt a contract completion bonus of £50 shall also be payable for each day of Services provided during the Second Term and shall also be invoiced at the end of the Second Term. "

Do you think this is a reasonable clause? Does anybody else have experience of dealing with contracts with this type of 'completion bonus'? Any ideas what negotiation approach I could take with them to have this paid in 3-monthly intervals?

Thanks in advance for you help.

[TheFaQQer]

I may have read this incorrectly, but you are only eligible for the £50 a day bonus if you complete the contract and it's been extended.

I'd try something like "On completion or termination of the contract, a sum of £50 shall become payable for each day of Services provided, which will be invoiced at the end of the contract"

I'm sure that there are better lawyers out there than I, who may be able to word it better - I guess they only want to pay at the end of the project (which makes sense). Have you got anything in the contract about what happens if the contract is not extended? What about if they terminate the contract, for any reason? I used to work somewhere when I was a student - at the end of the summer you were entitled to a bonus linked to every hour worked over the season. At the end of the season, management used to look for any minor infringements and fire people to avoid having to pay the bonus - make sure this doesn't happen to you!

[thebluemoose]

Thanks for the comments - I should have posted in the entire clause - I can see why it looks like it's only payable if extended from my initial post!
Here's the preceding section:

"4.2. The Consultancy will invoice the Client at the end of Initial Term for a contract completion bonus at the rate of £50 for each day the Services have been provided. A day for these purposes is deemed to be an 8 hour day, exclusive a lunch break.
4.2.1. This bonus shall be payable subject to the satisfactory completion of Services as defined in section 2."

So - the bonus will be payable at the end of the initial 3-month period if not extended, but wouldn't be paid until the end of the 6 month period if extended.
I'm somewhat concerned that there are ways the client could get out of paying this bonus (they could terminate a week prior to the end of the contract, which I guess would mean the contract didn't complete). The only saving grace is that I personally know one of the management team and I don't believe they would try any 'dirty tricks' such as this. Still, I'd rather have something more legally binding, rather than relying on trust.

[Not So Wise]

Completion bonus's are risky and I would have a lawyer draw up a contract because otherwise the client would have too many ways of getting out of paying, main one being finding some justification for terminating early and then refusing to pay due to the termination circumstances (as happened here this year to two contractors who lost their completion bonus...though in their case they were actually guilty and client was very justified in getting rid of them)

Also I would have them pay up on extensions, if they don't like that i would turn around and say that if they want you to accept the withholding of payment to "show commitment" then they should show commitment in reverse by signing up to a contract that would actually last the entire duration of the project, thus needing no extensions