Late payment - County Court, Debt Collector or Baseball Bat?

[peter.butler]

I have recently finished a 6 month software development contract and I am still waiting on the final few payments.

The contract contains a clause which states that the payment terms are either 30 days or when the client pays the agency, whichever is the later. The last couple of payments have been delayed by 16 or 17 days past the 30 day date, and I am now chasing a payment which is 18 days late.

I have been calling the agency trying to get payment out of them, and they initially maintained that the client hasn't paid them yet.

When I contacted the client directly, they refused to confirm whether they have paid the agency, saying that the arrangement between the client and the agency is none of my business, however they did say that normal turnaround time on invoices is 48 hours. I told the agency this and they are now "making inquiries". The agency have stopped saying that they have not been paid by the client.

What is the best approach in this situation? I have considered legal action, referral to a debt collection agency and a visit to the agency armed with a baseball bat, but I would like to get some opinions on the best course of action. Any ideas or suggestions are welcome.

[Epiphone]

or when the client pays the agency, whichever is the later

You're screwed. And do a search on here for late payment.

[pmeswani]

I have recently finished a 6 month software development contract and I am still waiting on the final few payments.

The contract contains a clause which states that the payment terms are either 30 days or when the client pays the agency, whichever is the later. The last couple of payments have been delayed by 16 or 17 days past the 30 day date, and I am now chasing a payment which is 18 days late.

I have been calling the agency trying to get payment out of them, and they initially maintained that the client hasn't paid them yet.

When I contacted the client directly, they refused to confirm whether they have paid the agency, saying that the arrangement between the client and the agency is none of my business, however they did say that normal turnaround time on invoices is 48 hours. I told the agency this and they are now "making inquiries". The agency have stopped saying that they have not been paid by the client.

What is the best approach in this situation? I have considered legal action, referral to a debt collection agency and a visit to the agency armed with a baseball bat, but I would like to get some opinions on the best course of action. Any ideas or suggestions are welcome.

As already stated, you could be screwed. However, if you can prove that the agency has intended to withold payment, you can always take them to court (small claims?) and try get your money. You have to prove that the agency is in breach of contract. May be hard to prove.

[Bluebird]

Id send the agency a recorded letter asking them to pay within 14 days or you will start court proceedings, refer to the "clause" within the contract and say that you will also be approaching the client with regards to the said court proceedings.


You can also say that if the client is withholding payment, you advise the agency to take the same steps you are taking to seek recompense.

My guess is that they are just stalling and are keeping the money in the bank for interest.

If it's under £5k I think you can use small cliams court - it's on-line & quick and easy.

[DaveB]

If the agency keep saying the client hasnt paid you can take out a Garnishee Order that allows you to go direct to the source of the debt and order them to pay, bypassing the agency altogether. Telling the agent you are planning to do this may well focus their minds a little more if they plan on keeping the client on their books.

[Not So Wise]

The contract contains a clause which states that the payment terms are either 30 days or when the client pays the agency,

Why oh why do people sign contracts with terms like this?

[BrilloPad]

I have recently finished a 6 month software development contract and I am still waiting on the final few payments.

The contract contains a clause which states that the payment terms are either 30 days or when the client pays the agency, whichever is the later. The last couple of payments have been delayed by 16 or 17 days past the 30 day date, and I am now chasing a payment which is 18 days late.

I have been calling the agency trying to get payment out of them, and they initially maintained that the client hasn't paid them yet.

When I contacted the client directly, they refused to confirm whether they have paid the agency, saying that the arrangement between the client and the agency is none of my business, however they did say that normal turnaround time on invoices is 48 hours. I told the agency this and they are now "making inquiries". The agency have stopped saying that they have not been paid by the client.

What is the best approach in this situation? I have considered legal action, referral to a debt collection agency and a visit to the agency armed with a baseball bat, but I would like to get some opinions on the best course of action. Any ideas or suggestions are welcome.

Is there a clause saying that if payment not made by a certain date then contract is terminated?

[Paddy]

I have recently finished a 6 month software development contract and I am still waiting on the final few payments.

The contract contains a clause which states that the payment terms are either 30 days or when the client pays the agency, whichever is the later. The last couple of payments have been delayed by 16 or 17 days past the 30 day date, and I am now chasing a payment which is 18 days late.

I have been calling the agency trying to get payment out of them, and they initially maintained that the client hasn't paid them yet.

When I contacted the client directly, they refused to confirm whether they have paid the agency, saying that the arrangement between the client and the agency is none of my business, however they did say that normal turnaround time on invoices is 48 hours. I told the agency this and they are now "making inquiries". The agency have stopped saying that they have not been paid by the client.

What is the best approach in this situation? I have considered legal action, referral to a debt collection agency and a visit to the agency armed with a baseball bat, but I would like to get some opinions on the best course of action. Any ideas or suggestions are welcome.

First of all before signing a contract always run a credit check on the agency no matter how big or small they are.

Send a polite letter giving them seven days to pay, then send a second strong letter threatening legal action to recover debt plus costs giving them 14 days. Exactly on the 14th day take out a small claims summons, you can do that online,

Your costs will be the cost of the summons, phone calls and letters, your time for preparation at the statutory rate (used to be about £8.50 per hour) plus if it goes to court your travel time, travel costs etc.

[NotAllThere]

Even with a clause like you accepted, it may be that you can still persue the debt. IIRC, there's something in the late payment legislation about unfair and unfairly imposed terms.

Under the ... Late Payment of Commercial Debts Act, ... bodies representing small and medium-sized enterprises, such as the Federation of Small Businesses, will have the right to challenge grossly unfair contract terms used by purchasers, which may affect the ability to recover late payment interest.

Get legal advice - pcg helpline if you're a member. Also payontime.co.uk have a mechanism for asking questions. Last time I used them (three yeas ago), they gave more comprehensive and practical advice than the pcg helpline!

[RichardCranium]

Why oh why do people sign contracts with terms like this?

Because most people do not read the contract.

I refused to start a gig last year because I didn't like the contract terms. The agent was genuinely surprised I had actually read it.

When I rent properties, the letting agents are always put out that I spend ten or fifteen minutes reading the contract before signing it. (To date, I have had to change at least one item on every letting agency contract before I would sign it.)