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Small Claims Question about a client who won't pay / Limited Company

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    Small Claims Question about a client who won't pay / Limited Company

    Hi!

    I've recently started a small project through my own limited company. The job is for a private individual, who I met through a mutual friend. Because of the friendly connection and the fact that we work in the same field in the same town, I didn't bother to draw up a formal contract with them. Nonetheless, we have discussed the project and payment extensively via email. After a couple of weeks' work, they are now challenging whether they ever agreed to pay me at all, and I'm thinking of taking them to small claims based on the email correspondence about the job.

    I have plenty of emails backwards and forwards over around 3 weeks where we discuss the job, I show them work progress and corresponding time sheets with hours/rates, they agree the work is going well, and they ask me to continue working for them after receiving these things. They have questioned some items from the time sheets over this time, but after each occasion, we've had a discussion, I've generally taken their side, and after that I've been asked to continue work. We definitely reached a point where all the questions about past work appeared to be settled, and I was asked to continue with new work.

    Unfortunately, about a day later, they re-started the question about whether they should pay for a particular item they didn't like (they wanted minor changes to it, and wanted to pay for the changes, but not the more significant underlying work). When I refused to back down on this, the conversation escalated first to a disagreement about the rates I'd put on older timesheets, and then to a disagreement about whether they ever committed to paying me anything at all for the work I was doing. They don't accept that the time sheets and work I've sent and discussed with them are proof that we have an agreement, even though these things have only recently been challenged. There is also no way I would be working with them or sending timesheets that include rates if I wasn't expecting these to be paid.

    My guess is that they are taking the view that, because we don't have a formal contract, they can ultimately get out of paying.

    I've successfully taken people to small claims before in circumstances where the only form of contract was via a similar email correspondence, but at that time I was acting as a sole trader, and this time I'm using a limited company. I know it's an extreme step, but is there anything that would stop a small claims court ruling in my favor on this?

    Thanks in advance for any replies.

    #2
    This may be of help:

    Take note: Emails can be legally binding!



    Only time I went down the Small Claims "Track" was for a pc company that I sent a pc back to them and they refused to refund me, went SCT process, date was set, they never turned up or answered any letters, judge went in my favour, the pc co went into Adminstration, I never got anything back. Best to have set deliverables and get paid for each one, before doing any more work.

    Good luck. Lesson learned, always get a contract and don't go into business with mates/family.

    qh
    He had a negative bluety on a quackhandle and was quadraspazzed on a lifeglug.

    I look forward to your all knowing and likely sarcastic and unhelpful reply.

    Comment


      #3
      Small Claims Question about a client who won't pay / Limited Company

      Sounds like they’re trying it on. Cease work, start dunning and gather evidence for a legal battle.
      Lack of formal contract is immaterial. You only need agreement to pay, proof of delivery and an invoice.
      See You Next Tuesday

      Comment


        #4
        Plenty of evidence there and although there is a lack of a formal contract (but you won't do this again will you?) there is an implied contract so you are covered, it's just messier.

        Have you tried mediation first? The Gov website on small claims a mediation option is a cheaper alternative. They list this website to find someone independent.

        Mediator Search – Civil Mediation Council

        The only issue I foresee is the lack of agreement around delivery i.e. what constitutes a milestone that will trigger payment. If you've got evidence you've delivered exactly what they asked for then you are good to go but we see plenty of these questions and them coming back for little bits or complaining areas aren't right are always a factor. If you can shore that up better before mediation it will help.
        'CUK forum personality of 2011 - Winner - Yes really!!!!

        Comment


          #5
          Thanks for the replies, yes, this is the last time I'll work without a formal contract. I'm also updating my terms to be more specific on what constitutes a deliverable.

          Comment


            #6
            Originally posted by northernladuk View Post
            Plenty of evidence there and although there is a lack of a formal contract (but you won't do this again will you?) there is an implied contract so you are covered, it's just messier.

            Have you tried mediation first? The Gov website on small claims a mediation option is a cheaper alternative.
            Good idea. It might simply take a disinterested third party to point out that there is an implied contract and "not paying" is not an option to get them to understand they have no leg to stand on, and should cough up to avoid costly legal proceedings.
            Down with racism. Long live miscegenation!

            Comment


              #7
              Did you send a quote (whether fixed price or T&M) or otherwise communicate pricing?

              In any case, sue them. If I get a painter and decorator to do some work, whether some trader or Ltd, I've never signed a contract but there has always been a contract in place. Just because it's "IT" they're trying to pull a fast one.

              Let us know how it turns out.

              Comment


                #8
                Hello again, if anyone is interested how it went (and for my own therapy):

                I made it clear that I was stopping work until pay was agreed and completed for the work created so far. I then invoiced them for all the work that they'd said they were happy with. I knew they had a deadline approaching and I was fairly confident that they wanted what I was creating for them, they just didn't want to pay the agreed costs. I was also more confident that we had a legally recognizable agreement after reading the comments here, which helped a lot (thank you).

                They responded to this first invoice with another (new) demand that I reduce costs, which I did as it was only a small reduction that they were asking for, and I thought they'd be more likely to pay quickly if they could think of it as a win. I then re-invoiced them, and the new invoice got paid . I'm happy to be done, even though I ended up cutting around 25% total from their bill.

                Anyway, it's taken up a whole week, and they're now extremely annoyed because I'm no longer willing to guarantee that I can finish the rest of their project in time. I have other upcoming work blocked in, that they've known about, but even so they've pulled out some fairly emotive words to imply that I'm doing it out of spite. I said I could perhaps return to it in a couple of weeks when things die down, but they seem to be convinced that I'm doing them wrong by not continuing work.

                I understand that I'm under no obligation to continue to work with them, but can anyone confirm that? We've discussed future work on this project, but there's been no agreement on what rates I would charge, so I think I'm in the clear (this again though --> emails-can-be-legally-binding).

                I've also asked them at least twice how they want me to send them the project files, and they haven't responded (they're in a complete rage over me saying I can't continue). Has delivery been made because I've performed the working hours (I've been billing at an hourly rate), or do I need proof that they've received the project files first? It's a lot to upload via something like WeTransfer, but if I send them a link to a download via email, is that acceptable proof of delivery? I want to get this out the door asap, but they seem to be trying to obstruct that exit.
                Last edited by yusefkerr; 9 August 2019, 21:51.

                Comment


                  #9
                  Frankly, I wouldn't work for them any longer. If you feel you want to, demand payment in advance for each work package.
                  Down with racism. Long live miscegenation!

                  Comment


                    #10
                    You gave them a 25% discount and THEY are in a rage?

                    **** em.

                    Comment

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