Reply to: Contract Breach

[AussieDigger]

I'm happy to be corrected but I'm not sure the agent's claim would be regarded as a penalty. Rather this may (depending on the detail) be regarded as leading to legitimate damages and damages are often enforceable depending on the circumstances. That said, tactically, invoicing for the two days might be the right thing to do in conjunction with some other actions. As ever, this is not legal advice and please don't rely on it.

Only a court can determine damages and to do that the plaintiff first has to demonstrate breach of contract and that damages are entitled and applicable. It can't be pre-determined in a contract beforehand because its unenforcable.

I'd ignore them, its bluff.

If anything, suggest to them that you're happy to mediate the matter through an arbitrator etc..

[Wanderer]

What a load of carp... You ever heard of an Offer Without Prejudice...

Ok calm down. You suggested offering to settle, someone who is not familiar with the process could easily omit the "without prejudice" part which is very important.

However, I still don't see that there is anything to "settle" as the damages claimed are completely bogus. I'll say it again - the agency are trying it on by claiming an outlandish amount of money in the hope that the other party will offer to settle and they will be quids in. It's the same principle as these "PCN" notices from private car parks trying to extort money out of people. Either stand up to them or ignore them and they will go away.

[dx4100]

Offering to settle is admitting fault

What a load of carp...

You ever heard of an Offer Without Prejudice...

[Wanderer]

And they can surely claim lost income they actually lose, i.e if they find a replacement in a week they have lost 1 week's income only.

That's right. It doesn't stop the agency trying it on with some made up "damages" claim in the hope that the contractor doesn't know their rights and will settle for a tidy sum.

Conversely, the contractor could claim that the agency/client terminated the contract without good reason (missing one day of work doesn't add up to a good reason) and claim damages off the agency.

At very least, I'd invoice them for my notice period if there was one.

Don't bend over and let the agency shaft you . Fight back!

[d000hg]

I would have thought being in a contract you can't terminate he could charge you the full revenue lost over the entire contract?

Is that reasonable when you haven't agreed anywhere what money the agent stands to make, only what they will pay you? And they can surely claim lost income they actually lose, i.e if they find a replacement in a week they have lost 1 week's income only.

[PSK]

Dear Wanderer,

No, I'm not thinking of liquidated damages. For information, in layman's terms with a little background -

A breach of contract occurs where a party to a contract fails to perform his obligations under the contract. This can take various forms for example, the failure to supply goods or perform a service as agreed.

A breach of contract, no matter what form it may take, may entitle the
innocent party to maintain an action for damages. There does not need to be any amount of damages agreed in advance in the contract and many contracts do not set out agreed damages for every contingency or breach.

Damages is the basic remedy available for a breach of contract. It is a common
law remedy that can be claimed as of right by the innocent party.
The object of damages is usually to put the injured party into the same financial
position he would have been in had the contract been properly performed.

The major remedy available at common law for breach of contract is an award
of damages. This is a monetary sum fixed by the court to compensate the injured
party. In order to recover substantial damages the innocent party must show that he has suffered actual loss.

Where both parties agree a genuine preestimate of loss then that would constitute liquidated damages, which as you say is not the case here. A breach in that case could give rise to a liquidated damages claim and if the contract excludes the right to the innocent party to claim any further damages then this would limit the damages that could be claimed.

Where no liquidated damages have been agreed then the damages would be based on the actual loss. There is a lot of caselaw around remoteness of loss, loss of profit and suchlike but damages based on actual losses may indeed be claimed.

Penalties, both for liquidated damages and for 'unliquidated' damages are unenforceable as the purpose of damages is to compensate the innocent party rather than to punish the party in breach but that does not mean every unliquidated damages claim are penalties and unenforceable. Whether the agent's claim here would succeed if this went to court would depend on the circumstances.

If in this case, the agent lost out on the revenue from their commission and they earned no commission from any replacement (if they were on a multi-agency roster) or if they were on a fixed fee and had to refund the client that fee then it is possible that there was an actual loss that could be payable as damages. As I mentioned earlier, if they got the commission from any replacement then their actual loss might be based on the costs of the search for the replacement.

Whether the agency is trying it on will depend on how they have calculated the £6k claim and whether, if this did progress, that basis would be found reasonable.

I think you are right that one avenue is to assert the client has terminated the contract and I agree legal advice should be sought.

[Wanderer]

I'm happy to be corrected but I'm not sure the agent's claim would be regarded as a penalty. Rather this may (depending on the detail) be regarded as leading to legitimate damages and damages are often enforceable depending on the circumstances.

You are thinking of Liquidated damages which have to be agreed in advance in the contract. Even then, they could be challenged in court and set aside if they are excessive (as I think they are in this case). It sounds like the contract does NOT contain a liquidated damages clause so the agency are trying it on.

Rest assured that it's very unlikely that the agency will take this to court.

My advice is to send them a letter, recorded delivery, stating that as they have terminated the contract, you will no longer be doing business with them (no more or less than this). Then ignore them completely until they go away. This includes ignoring them when they send bluff and bluster letters from debt collectors and/or solicitors (knocked up in 30 seconds by the office boy/girl using a form letter) threatening you with CCJs against you personally, pumping up the amount that yourLTD "owes" them with legal fees added etc. Trust me, I've been there and done that, if you start biting back then they will pull your chain for even longer. They cannot bring a case against you personally, always reply in the voice "MyLTD rejects your claim, blah blah blah". Don't ever let them coerce you into thinking that this is a personal matter because it's NOT.

The only time to contact them is if they actually initiate court proceedings against you. Note that this is actually initiating the proceedings, not rambling on about how they could do it if they decided to and how many thousands have been added to the bill for legal costs (which would be thrown out as excessive by the court anyway). If it ever does come to court then make sure you have ceased trading with your company and started a new so they get NOTHING.

BTW I keep seeing tulip mentioned, what is this?? LOL

Don't know mate. I guess tulip happens. Just don't take any bulltulip from this agency.

If I ever found myself in this situation ( I wouldn't ) I would probably take proper legal advice. If I was going to handle it myslef I would make them a counter offer of £2.5k take it or leave it.

Noooo. They have come up with this bluff and bluster claim for £6k (with no legal backing) in the hope that you will settle and they can pocket a wedge of cash. Offering to settle is admitting fault, don't ever do that. Don't pay them a penny.

I am not a lawyer though so if it really bothers you then consult a lawyer, though they will probably go through hours and hours of discussions and review of contracts etc then present you with a big bill at the end of it. Lawyers have a vested interest in stringing these things along because the longer it runs for the more money they make.

[dx4100]

If I ever found myself in this situation ( I wouldn't ) I would probably take proper legal advice. If I was going to handle it myslef I would make them a counter offer of £2.5k take it or leave it.

To be frank I think the agency have a point. You haven't dealt with this very unprofessionally. With any contract you agree to you should always know your exit strategy. Such a tight lock in is just bloody suicidal in my opinion.

If they didn't want the £2.5k then I would take my chances in court They would probably get bored before it go to court and accept my reduced offer of £1.5k and cuddly toy

[d000hg]

I do have the option of a substitution, if you like we can PM on this forum to discuss the role?

I didn't mean for me personally though thanks I was thinking someone here might be interested, you're allowed to post the details as long as you're not an agent spamming the forum!

[gingerjedi]

I've never taken a contract that I had any doubt about fulfilling but if I did want out I'd just go sick, no-one can argue with that.

[PSK]

In answer to your question, the doctrine of frustration sets a fairly high test. If it's not impossible for your company to complete the contract, then your contract probably hasn't been frustrated. I am not offering legal advice but from what you've said, you might struggle to show that performing the subject of the contract is impossible (in layman's terms, it isn't that you find it difficult to do the work and meet your domestic duties, rather that a third party would consider it impossible for the work to be done at all).

I've mentioned that you might want to get a solicitor to write a letter (either a reply to any written communications you have received from the agent or client [it might get complicated as your contract will probably be with the agent] or a letter in response to the conversation you've had with the client or agent saying bridges have been burnt) if £6k is a significant sum to you.

If for some reason you don't want to engage a solicitor, you might want to write a letter yourself. You will have to choose whether you reply to say how surprised you are that they are saying you have breached your contract, given that it is clear the client has chosen to terminate the agreement, your communication was not a notice of termination and that you require paying for the two days work. If you no longer want to work there given your dometic circumstances then you could reply to whichever of the client or the agent who've told you they don't want you that you are accepting their notice of termination but for the avoidance of doubt, you haven't terminated the contract and for the avoidance of doubt, you are not liable for any payments to the agent for lost fees or costs or whatever they define it in the contract as. As I keep saying, things will absolutely stand or fall on the detail of the contracts and the previous communications so you would be well advised to use a solicitor. For what it's worth, if you handle this badly, I think you are at risk of being liable for the agent's £6k, depending on the circumstances. If they have jumped the gun and if you handle this well, you might have been given by their actions a situation where you can get out of a one-sided contract without the liabilities that would otherwise accrue. Either way, the price of a solicitor's letter and consultation might be small in comparison. This is not legal advice, you shouldn't rely on it and good luck.

[fingwong]

Thanks Wanderer for the welcome, im certainly enjoying the response and advice from everyone here.

Firstly Singhr, thanks for the grammatical critique and recommendation. Im trying to gain advice on what is a serious issue for me and your contributing nothing constructive to the thread so id rather you didnt bother. Thanks

PSK, your advice seems to make sense, the email that was written to the client, never actually mentioned any fomal termination, it merely explained my position and that in the short term due to personal issues, the daily commute had become a big issue. PSK the company (as far as ive been told) exclusively use this agency, so if thats the case, the agency will still have the ability to place someone. I have also ofered them any help I can give them as well. The term "frustrated" has also been mentioned by Aussie Digger and the legal people I seeked advice from, anyone ever heard it used though??

Thunderlizard, as far as Im aware, the agency just gets a flat fee, not a fee over the course of a contract, I may be wrong, but Im sure thats what been mentioned to me in the past by the agent during negotiations.

d000hg

In answer to your questions, I didnt formally tell them I couldnt work, I missed one day, the next day after the event, I have offered to continue to oblige the contract so from my perspective I could continue to work until a repalcement has been found. After speaking so some legal people, they said that doing a bad job would look a bit obvious, as if I was trying to get myself sacked off. I have told the Agency that this was a panicked moment and heard nothing back from them as well.
I do have the option of a substitution, if you like we can PM on this forum to discuss the role?

BTW I keep seeing tulip mentioned, what is this??

LOL

[PSK]

I'm happy to be corrected but I'm not sure the agent's claim would be regarded as a penalty. Rather this may (depending on the detail) be regarded as leading to legitimate damages and damages are often enforceable depending on the circumstances. That said, tactically, invoicing for the two days might be the right thing to do in conjunction with some other actions. As ever, this is not legal advice and please don't rely on it.

[Wanderer]

They have now demanded that I pay them £6k + VAT as a full and final settlement.

They are real comedians, aren't they. They can't enforce this against you, they are just trying it on. Even if it's written in the contract a penalty in a civil contract is very, very rarely enforceable. They would get laughed out of court and they know it.

Send them an invoice for the days worked and threaten THEM with legal action if they don't pay, that will put the wind up them. I wouldn't take it too much further though considering you failed to perform the contract...

Put it down to experience and move on.

Oh, and welcome to the forum by the way!

[PSK]

The following is not legal advice and you should not rely on it. Sorry for the long post.

I am sorry for the circumstances you find yourself in. I hope your wife recovers.

Please find some thoughts regarding your questions (with a suggestion that depends on whether the agent places your replacement) then a suggestion concerning whether you are in breach. Regarding your questions,

1) Firstly, in the contract they are right, there is no notice period on my part, however, what would happen if I die?? Would this bill be taken accross as a burden to my family??

These aren't the circumstances you are in. Depending on the nature of your firm's contract (are you contracting through a firm?) it's not certain whether your contract would be frustrated or whether your firm would be liable. Aside from the legals is then the question whether the agency would take the commercial decision to enforce any rights it had.

2) Nowhere in the contract does it mention that I would need to pay these fees should I be unable to continue the employment.

Not all contractual rights in a contract need to be identified with a corresponding remedy. If the contract is silent, the agency may be starting negotiations. If the client sources another contractor from a different agent (you've not said whether the agent is on a multi-agent roster or a sole agency) then the fees the agent would have earned over the life of the contract might in some circumstances be viewed as reasonable. If the agent places your replacement then, again if the contract is silent and depending on circumstances, it might not be reasonable for the agents to earn two sets of commission for the one role (one from you in damages and one from the client for the replacement) and the 'costs' might be argued to be the 'administrative' costs in the work to secure the new contractor and possibly any increased rate they've got to pay to secure the same caliber of contractor. If they earn their commission on placing the second agent and the contract is silent, I'd certainly want a discussion with them about them going after you for their 'missed' commission. If they don't place your replacement then you might want to think or argue whether you are likely to have worked the full duration of the contract - if your client tends to terminate early then this could reduce the likely fees the agent would have earned.

3) I have a copy of the contract in front of me, signed just by me, no-one from the agency, does this make it null and void?

Many contracts won't need two signatures anyway unless it was written that way to require it. If you turned up and started work then it might be that acceptance may not be a helpful avenue for you.

4) Do these contracts usually carry a cooling off period? I know most are around 14 days, but isnt it general terms that allow anyone to have a cooling off period? I would be within this period if thats the case?

In commercial, non-consumer contracts then I've not come across the requirement for a cooling off period for our kind of work before.

Good for you in thinking through some potential avenues.


In my experience, some agents are struggling for £ so their threats might be more likely to be taken forward than in happier times.

I've reread what you said and, depending on what you put in your email, I wonder whether another avenue to explore would be based on "For this reason I emailed the client direct, explaining that having had this issue arise, it had compounded my fears that the commute was probably going to be too long for me to continue with, at least in the short term. I received nothing back. "

I'm trying to stretch things and, given your circumstances, putting any morality aside about standing by your agreement. Depending on what you actually wrote, it might reasonable to argue this was not a notice of termination from you putting you in breach but rather a communication to inform your client of your circumstances, discuss things, ways of working, what changes might be available and such like. If you could reasonably argue that then you might be in a happier position and, in practice the client might be viewed as having terminated your contract using their provision. I'm not saying this is the case as it will stand on what your communications said. To protect your position, you might want to deny any of the telephone conversations if you said anything that makes this untenable and review what you've posted here or elsewhere. At best, you might not be on the hook for the agency's commission and you might be due your two days' worked fees. If contracts aren't your thing and if £6k is a significant amout of money to you, you might be better having a solicitor read what emails you sent and drafting the letter to send to the agency and client.

As with many legal things, it may stand or fall on exactly what is in the various contracts and what was said. As I said, this is not legal advice and you should not rely on it.

Good luck.