Contractors' Questions: What if my IT contract's shorter than I was told?

Contractor’s Question: My agency offered me a contract via email for a 12-month term at £350 a day. I got agreed that the rate would be reviewed with a view to increase in month three and month six. The basic commercial terms were then agreed with the agency; they sent a contract which incorporated those terms, I signed, sent it back and started work.

To take on this contract, I had to cut short my previous one which was £450 a day (though it would have ended at the end of January), hence my pushing that this engagement for £350 would see the rate reviewed, upwards-only, in the third and sixth month.  

But I’ve now find out that the client has committed to only three months. Since objecting, the client informally told me it may extend me for another three, and possibly then for up to a year in total. That’s somewhat reassuring but I feel the agency (which is meant to be one of the top five internationally) has misled me and breached my trust. Where do I stand, legally?

Expert’s Answer: Firstly, it is likely that the terms of the contract document you signed will be binding on both you and the agency. It doesn’t have to be signed to be binding

Analysing it in the conventional way one looks at contract formation, their sending the document to you probably constituted an offer, which you accepted by signing it, and communicated to them by sending it back to them;  and it seems likely that the other two essential requirements for a contract – consideration, and intent to create legal relations – are present. 

It might have been clearer if they had also signed and returned a copy to you, but that doesn’t mean that a contract in those terms has not been formed – it probably has - or that it is not binding - it probably is.

Second, your feelings about breach of trust are understandable; but is there anything you can do about it?

Is there a breach of contract?  Well, probably not -- unless the contract contained some express statement to the effect that the client had committed for the agency 12 months. If the written contract contains an ‘entire agreement’ provision, that the contract itself is the only place you need to look for that express statement. 

If it doesn’t, you could also look at how and when this assurance was communicated to you, and at how you responded to it. As a professional contracts advisory, we would then need to form a view as to whether or not the assurance, though not written into the contract (i.e. the document) itself, had become incorporated into the contract (by which I mean the entire understanding between you and the agency, not just the document).

Most written agency contracts are unlikely to contain such an assurance. At the start of the last decade, there was one (then) fairly prominent agency that began its standard written contract with a statement to the effect that the client had committed in similar terms to the agency; that agency also had a habit of signing up contractors ASAP, in the hope that they could then sign up the client – which they didn’t always succeed in doing. After I had caught them out on this point (on behalf of contractor clients of mine) on a few occasions, they learned the lesson, and changed their terms.

In the absence of such an express assurance, is there a basis on which we might claim that such a term might be implied into the contract?  I suspect not.

If the written contract does not contain a ‘no representations’ provision (generally such a provision would say that, in taking your decision to enter the contract, you had not relied on any representations made to you by the agency), and if you could show (a) that a representation that the client was offering 12 months was in fact made to you, and (b) that you relied on it in taking your decision to accept the contract offer, you might have grounds to claim misrepresentation. That might entitle you to rescind the contract and walk away now.

But I suspect that any claim for damages you might have – even assuming that you should show either breach of contract, or misrepresentation - would in any case be doomed to fail, if (as is almost certainly the case) the agency had a contractual right to terminate the contract prematurely, without fault on your part.

It would generally be the case that a claim for damages would be limited to the amount you would have lost, assuming the agency terminated the contract as soon as they lawfully could. If they could lawfully terminate the contract early, then your losses as a result of their breach (or misrepresentation) are likely to be nil.

And that is why your experience (being signed up by the agency for a longer period than the client has committed to them for) is not uncommon among contractors.  You’re not the first, and I’m sure you’ll not be the last.

So, while I understand you feeling aggrieved, I suspect it is unlikely that there is anything practical that you can do about it, other than wait and see what happens. It is of course possible that the client will offer to extend – quite possibly more than once; and it is possible that you will get meaningful rate reviews as promised.

In the future, if you are relying on an assurance that the client has offered 12 months, at least insist that the assurance is written into the contract. At least insisting on that should give you a better prospect of establishing whether what the agency is telling you is in fact true.

The expert was Roger Sinclair, legal consultant at Egos, a contracts advisory serving the IT sector.

Editor’s Note: Related Reading –

Contractors’ Questions: Is my acceptance on email binding?

Emails did not form a contract – ruling

How to escape from a legally binding contract

Tuesday 23rd Dec 2014
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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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