Reply to: Contract terminated help

Oooh, a veiled threat to up the ante. Quite a clever comeback by the agency, I must say. Now, you have to ask (and be honest with yourself), do you think there was any thing that could be construed as poor workmanship? I'm not suggesting there is, but you have to have a hard think about if you could argue your case in front of a judge.

Was the contract to deliver a specific piece of work (price work) or to give X days of consultancy on a daily rate? Price work, you have a tough one to prove and if the work could be proved to be defective then you would legally have to fix it (though you have to consider if there was scope creep or an inadequately scoped project). X days consultancy is a bit easier, you turn up and do the work the question is was the quality of the work delivered of merchantable quality, so to speak.

Correcting any defects for free is only really viable for a fixed price deliverable, otherwise, anything that you touched that has deficiencies could potentially come back to you to be fixed.



No it isn't, it will be decided by a judge in a court after consideration of contract law.

I would be inclined to demand a detailed explanation of what was deficient and how the propose that it be rectified. If they can't provide that (they may just want to get on with their business) then they have to pay up.

You could also consider taking it to court and forcing them to file a defence/counter claim and see what happens. They may back down or they may fight it. If they fight they would have to file a detailed defence and they may not be willing to invest this much time. There is a risk that they could counter claim, do you have PI insurance? However, you can (quietly and not in writing) point out to them that your company has no assets so even if they got a judgement against your LTD, they couldn't enforce it anyway.

Personally, I'd take it to court just for the experience. Win or lose, I'd take it as a lesson on how to deal with this situation in future though there is possibly something to be said for walking away and avoiding all the stress. I've learned to pick my fights carefully, don't start it unless you are determined to win it.

Anyone here ever actually had one go to court?

I agree on this. The agency's response is clearly one designed to sabre rattle without actually providing any substance. The bottom line is that if they were not happy with the work, they are obligated - by law and typically within the contract (if specified) - to convene a meeting and state the reasons and offer you the opportunity to remedy the defect.

Basically what they are saying in their response is that you've breached your contract with fauly workmanship but not actually issued a breach notice, which is typically what should be done. As I said earlier, if you took this to court then you'd likely find that the court would look to enforce the contract being upheld, meaning that it wasn't justifiably terminated.

Clauses that state the client can terminate for any reason are just a load of old ***** because they are a catch-all to give the client the chance to back out at any time without a good reason. However, many such clauses 'could' be argued to be 'unfair terms' or 'contrary to good faith' under contract law. Thats how bad some contracts are in the IT industry. You could certainly make a good case on it simply on the basis that your repeated attempts to demand explanations at the time of termination and after led to yet more reasons which don't add up and don't align to actual events (especially if the client did not verbally or in writing inform you or the agent when they identified the poor workmanship - a 'reasonable' thing to expect). Added to that your comment that the client actually has a history of doing this, and you have an excellent case.


I'd certainly take legal action on it on several fronts as its just plain dodgy.


The way to get around these in contracts is to actually word into the contract that termination due to defective workmanship or 'any other reason' must be agreed between the Client, the Agency and the Contractor (Company) such that all parties agreed the contract cannot continue. At that time you have recourse to demand written explanations or external scrutiny of the work to actually make that determination. I had one agency 'try it on' recently with such a clause and I worded that in on the basis that the notice period would become 'mute' if the client could simply terminate for any old reason rather than one relating to negligence or incompetence etc and that all times it had to be mutually agreed and myself afforded the right to remedy the defect. Only then can you walk out on your terms and stop clients just pulling the plug when you've invested time and money into executing the contract.

I'd fight the case - I'm sure you'll win. Just persist at it.

Surely the highlighted part of the contract blows the OP out of hte water?

Interesting, but couldn't you argue here that the termination clauses conflict with each other ?

Bottom line is that if a contract is signed, the only way it can be terminated is with due notice unless there was some sort of breach on the part of the contractor. And in any case, the Client has to issue notice to the agency who must then issue notice to the Contractor. So the demand for explanation of termination goes with the Agency and its them who must justify it. They can prattle on all they like about having to check with the client and find out this, that or the other - but thats irrelevant at law. Its their contract with you and they are obligated to ensure they fulfill their side of it.

The other thing here is that if the Client has done this before, get the contractor who was the victim to provide a statutory declaration as to the facts in his/her case. Then hold this up to the Agency (or court even) and basically say that as the Client has a history of doing this, it can be argued that they have entered into the contract 'in bad faith'. Thats a whole different kettle of fish then because the basis upon which you could sue them is for breach of contract, and that can lead to damages etc. Even rattling the cage with this sort of thing will invoke action by the Agency.

I'd stand the ground here and demand payment. Its not your problem that the contract was terminated on Day 1. You showed 'good faith', so should they.

Finally, at the end of the day its a contract. We've all had agencies do this (and client's for that matter) and if you don't stand your ground then the contract is worthless. When put under scrutiny in court, the courts will 99.99% of the time look to enforce the contract, and they will demand of the party who terminated to demonstrate why they entered into the contract and then did not fulfill it. Its nothing to do with being an IT contractor and everything to do with basic contract law.

Further advice is to consult with APSCO or REC (whichever one the agency is with) and lodge a complaint with them (and tell the agency you are doing this) suggesting that the agency has not (or is not now) fulfilling their duty of care under the code of conduct they are bound to, which is to conduct the contract fairly and according to the law. Of course, either way you burn your bridges with the agency but if the agency is so lazy as to not ensure your interests are represented, then would you want to contract through them again anyway ?

[diesel]

well got paid for all weeks worked today. Only thing that i outstanding is the issue of getting my notice period paid.

Just wondering a lesson learned from this event is that i would not sign and agree to such terms again. Has anyone had any success in ever getting T&Cs changed to suit?

[DS23]

aside from the last one - are your invoices paid up?

[Wanderer]

client was "unhappy with my work and quality hence the reason for immediate termination". Also they have said client has a right to refuse payment for last invoice and also seek damages from me and right of seeking correction of work at no cost to them. They have not taken up this right at this time.

Oooh, a veiled threat to up the ante. Quite a clever comeback by the agency, I must say. Now, you have to ask (and be honest with yourself), do you think there was any thing that could be construed as poor workmanship? I'm not suggesting there is, but you have to have a hard think about if you could argue your case in front of a judge.

Was the contract to deliver a specific piece of work (price work) or to give X days of consultancy on a daily rate? Price work, you have a tough one to prove and if the work could be proved to be defective then you would legally have to fix it (though you have to consider if there was scope creep or an inadequately scoped project). X days consultancy is a bit easier, you turn up and do the work the question is was the quality of the work delivered of merchantable quality, so to speak.

Correcting any defects for free is only really viable for a fixed price deliverable, otherwise, anything that you touched that has deficiencies could potentially come back to you to be fixed.

Also the agency and client have said "reserve the right to what constitues an emergency is at discretion of agent".

No it isn't, it will be decided by a judge in a court after consideration of contract law.

I would be inclined to demand a detailed explanation of what was deficient and how the propose that it be rectified. If they can't provide that (they may just want to get on with their business) then they have to pay up.

You could also consider taking it to court and forcing them to file a defence/counter claim and see what happens. They may back down or they may fight it. If they fight they would have to file a detailed defence and they may not be willing to invest this much time. There is a risk that they could counter claim, do you have PI insurance? However, you can (quietly and not in writing) point out to them that your company has no assets so even if they got a judgement against your LTD, they couldn't enforce it anyway.

Personally, I'd take it to court just for the experience. Win or lose, I'd take it as a lesson on how to deal with this situation in future though there is possibly something to be said for walking away and avoiding all the stress. I've learned to pick my fights carefully, don't start it unless you are determined to win it.

Anyone here ever actually had one go to court?

[Muttley08]

As I understand it, they have to be clear if they're terminating the contract on those grounds when they terminate it. If they haven't then their case is a bit thin.

My advice would be if to get some professional to point you at the legal bits to do with this, case history etc...

That said, you're down to a lot of work pushing this through and proving it for 5 days....

[diesel]

received a recorded delivery letter today from agent - fast response!
Basically they have said client was "unhappy with my work and quality hence the reason for immediate termination". Also they have said client has a right to refuse payment for last invoice and also seek damages from me and right of seeking correction of work at no cost to them. They have not taken up this right at this time.
Basically sounds like they are ready to counter sue me for the work. In fact if they told me what they were not happy i would have easily said yeah i will do an extra few hours from home at no cost to correct. But they did not.

Also the agency and client have said "reserve the right to what constitues an emergency is at discretion of agent".

any views welcome.

[diesel]

Surely the highlighted part of the contract blows the OP out of hte water?

some interesting discussion here.
All my past and current contracts only cover immediate termination in the event my LTD co goes insolvent or bankrup - none of which neither apply.

But they have not provide any explanation of "emergency" and no explanation of "reason". But even by applying the 3rd clause one can interpret the same as i said before...."we expect contractor to give us notice but we (client) can do what we want"


Old greg - thanks for the defintion link..could be a good one to produce if this ever gets to court.

surely there must be others who have had experience of being treated this way unfairly and breach of contract???

[Ignis Fatuus]

Thanks for replies so far. Just to clarify i am LTD co. I have contract with agency and agency have their own with end client.

This is the terms for termination in the contract:
TERMINATION
x.1 An assignment may be terminated by the Company or the Subcontractor giving the other party the period of notice of 5 working days, except in cases of emergency and the Company’s decision as to what constitutes an emergency shall be conclusive.
x.2 Failure by the subcontractor to give notice of termination as required in S.17.1 shall constitute a breach of
contract and shall entitle the Company to claim damages from the Subcontractor for any consequent loss suffered by the company.

x.3 The Subcontractor acknowledges that the continuation of an Assignment is subject to and conditioned by
the continuation of the contract entered into between the Company and the Client. In the event that the contract between the Company and the Client is terminated for any reason the Assignment shall cease with immediate effect.

Surely the highlighted part of the contract blows the OP out of hte water?

[Old Greg]

Interesting so far. Client/agency posted me a letter stating contract terminated on basis of "emergency" which is part of a termination clause as in my earlier post. They (client) refuse to date to provide further detail what is the emergency, which led to my contract being terminated. Funily i heard of similar story with another chap being terminated before i joined this client!

Well took some contract legal advice...and they suggested i write letter back for further information on the basis of "emergency" and threaten them with small claims court. Adviser suggested that unless my company is insolvent or bankrupt (which is not case) or i have done nothing of serious misconduct at client office, they have no reason for emergency termination. Even if I did something not correct they should have made me aware formally or a formal meeting/notice before temrinating contract - which never happended. This legal chap recommend i use moneyclaim.gov.uk for a small claims court claim, which he thinks should be straight forward and any district Judge will ask client/agency what is the "emergency" and what steps were taken to notify contractor before termination i.e. is there an audit trail or traceable communication? (erm no)

I welcome your views on this, as i notice some forum members say well its part of contracting risk; others saying there can be nothing done. Any suggestions/help/advice welcome.

Lesson to learn: Always check your termination agreement and double check you are happy with the wording. if not change it or walk away or work with an "gun" to your head week to week

Emergency? Is there a force majeure clause e.g. Force majeure - Wikipedia, the free encyclopedia (might be US based and IANAL etc. but gives you the general idea)? If this is what they are claiming, as OPs have said, they must justify it.

[Wanderer]

Follow it up with a final 7 day "Letter before action" after the time limit to pay up has passed.

I have found that sending a copy of this type of final warning letter to the Company Director and sending it "signed for" (costs a quid or so from the post office) works wonders too. The problem was sorted out the day they got the letter.

[Wanderer]

The problem with this agent this agent they work on self billing with client and ignore all invoices.

Hmm. How do you deal with that situation then. With self billing, the client or agent raises the invoices for you and then pays them, my LTD doesn't raise invoices (it's not allowed if you operate self billing). If the agent/client doesn't raise an invoice and (potentially) you don't have a timesheet either, how can you demand payment?

[theroyale]

TheRoyal - did you send your agency a letter from a solicitor? or is there some sort of online legal/debt collection system that can send a threatening letter for a fixed fee? Or if i give them 30days notice can i use small claim court?

Didn't have to send solicitor letter although I was preparing to - all I did was send an official sounding email that said "xxx invoices are outstanding on payment. Please let us know the status of these invoices".

Seemed to do the trick. As someone else has mentioned here they don't want to get involved in any proceedings, especially when the b******* in your case clearly don't have a leg to stand on.

As for email v recorded delivery I was advised that email was just as tenable legally - although other people here need to confirm that. (I did follow up the actual email with "For our records could you please confirm you are in receipt of this email")

[diesel]

Just got back to this board.

Yes must ask the client what the emergency is and ask for the reply in writing within 7 days, repeat the demand for payment and enclose an invoice, state a time limit for them to pay the invoice by and then state you will take them court if they don't pay up. Send all letters via recorded delivery

Follow it up with a final 7 day "Letter before action" after the time limit to pay up has passed.

The reason people say don't bother chasing it's a lot of hassle and it doesn't guarantee they will pay up. Plus many people use the phone to discuss things and forget to follow it up in writing which means they don't have proof of what was said.

However lots of people and companies will pay up once they get court papers. Hence I've never had to take anyone actually to court because of this.

You also have to be on the ball and make sure you send your letters in the right time and ensure in each letter you make it very clear what you are claiming for with costings if possible. So you need to make it clear you are claiming court costs, interest, the outstanding invoice amount and any statutory late payment fees (if applicable). If you don't then you can't claim them later.

You also need to ensure you can prove that they will have got the letters and that you acted reasonably. So you need to send them more than one letter asking politely for payment.

If they do pay up before you go to court you are out of pocket for the postage, court fees etc.

Sue, thanks for reply. Not all such letters have to be issued via recorded dleibvery. if email communication is already in use between discussions it is acceptable to send a pdf letter via email. But is always preferable to send by at least 2 means i.e. email/post or email/fax to show you have made effort to get letter across. The problem with this agent this agent they work on self billing with client and ignore all invoices. But its a good point to send an invoice may stating "Do not ignore".

the legal adviser also stated the same, as soon as they get court papers they will panic as they have no ground to stand on. But it would not suprise me if these cowboys make up some rubbish excuse to force me into emergency termination. When i was there last week everything seemed okay and i was chatting to the managers at coffee machine with no problems. This was a job i was actually making a lot of effort with including working some extra time each day!
right will get invoices issued to them again.

[SueEllen]

I'm not sure you can charge fees other than 8% plus base rate though its still worth trying I am not sure on this as I read it online. So what the statutory rules allowed in one hand they stopped with the other.

There is a fee you can charge them for late payment of the invoice plus the interest. - Late Payment Legislation and the BPPG Interest Calculator.

You basically need to claim for everything you can think off. The judge may tell you "No you can't claim for that" but if you don't put it in your initial claim you can't claim it later.