Payment major issue with client

[DigitalDesigner]

Hello All,
if you quote a new client for a job with a quote which outlines very clearly what is included and then half way through the project the client asks for very many additional changes such that the original quote's work was never completed "as quoted", nor delivered, could they have ground for breach of contract and ask back some or all of the money they previously paid?

Originally they asked to design a controller to do only basic digital motor control (both hardware and basic firmware). Then half way through the project they started asking for more things including UI graphic display, remote ethernet communications etc. Because of the new mods the clients requested, then quite a bit of the functionality of the original quote was not implemented.

All mods have been asked in writing by the client and I reminded the client in writing several times during the project that all those changes were not part of the original quote. And the quote clearly states it is valid assuming there are no changes to the specs outlined within the quote.

When the invoice for the huge amount of extra work he requested was sent, it was much more than he expected and he refused to pay it offering a tiny fraction of it and asked for the original quote's deliverables (which, again, were never completed because he asked for different functionality half way through the project). And he then thraetened that if the original deliverables are not delivered then he files for breach of contract and claims all the money back for the whole project.

He is a bully and just to give you an idea of his tactics, he offered to pay twice the amount of the invoice for the extra work but across several years with a royalty scheme. So that to clear the invoice amount it would take over 7 years. And he has made such offer with "Without Prejudice" written at the top so it cannot be used in court.

The main question is, legally, does he have any ground to stand on about breach of contract?
And do I have any obligation to do any more work to deliver the original specs too?

Any suggestions to get out of this situation and how to deal with bullies like that?

Thank you very much!!

[okw]

I'm no lawyer, but I would say you are both legally bound to the initial contract. You build and he pays. But he can't expect anything more than what the original contract outlines.

[SiliconWizard]

if you quote a new client for a job with a quote which outlines very clearly what is included and what is not and then half way through the project the client asks for major changes such that the original quote's job was never completed as quoted, nor delivered, could they have ground for breach of contract and ask back the entire project money paid?

Of course not. But...

Originally they asked to design a controller to do only basic digital motor control (both hardware and basic firmware). Then half way through the project they started asking for more things including UI display, remote ethernet communications etc. Because of the new mods the clients requested then quite a bit of the functionality of the original quote was not implemented.

When the invoice for the huge amount of extra work he requested was sent, it was much more than he expected and he refused to pay it offering a tiny fraction of it and asked for the original quote's deliverables (which, again, were never completed because he asked for different functionality). And he then thraetened that if the original deliverables are not delivered then he files for breach of contract and claims all the money back for the whole project.

Are we to understand that all of those modifications were asked and executed informally, without any addendum to the original contract? If so, unfortunately, your fault entirely. Never do that.

Legally, does he have any ground to stand on?

If you accepted to make major modifications informally, without a new contract or addendum thereof, you're screwed. Actually, if you implemented the new, informally requested features, but did not implement all the original features (to their demand, but again informally if I get it right), they would have ground to claim you didn't honour the contract. And maybe not even pay a dime.

Any suggestions to get out of this situation and how to deal with bullies like that?

To get out of it: if you have evidence of clear exchange between your client and yourself (email, whatever) for the modifications they asked, hire a lawyer and get prepared to fight...

For the future: never accept any changes unless you sign an addendum of the original contract. Just my 2 cents.

[DigitalDesigner]

Thank you both,

Are we to understand that all of those modifications were asked and executed informally, without any addendum to the original contract? If so, unfortunately, your fault entirely. Never do that.

all changes were requested in writing by the client in endless emails and I repeatedly reminded him in writing they were not part of the original quote.

Does that change anything in my favor?

Thank you very much.

[m98]

Does that change anything in my favor?

In Germany it certainly would. Both sides can consensually modify (most) written contracts after the fact. When dealing with a business entity, this consent can even be given by implication, just by the other side not disagreeing.

In any case, sounds like it's lawyer time.

[jonpaul]

We consulted for decades. Our General Proposal Provisions clearly cover the situation.

As soon as customer requirements are changed from original, we estimate BEFORE HAND the added expenses.

Arguing and negotiating after the facet is always a losing argument.

I would find a experienced commercial lawyer in your country to get an opinion. Expect EU 500 for a consult and perhaps EU5000 to start legal actions.

What was the job worth?

Bon Chance


Jon

[DigitalDesigner]

The invoice is around 18,000 Euros

[SiliconWizard]

Thank you both,

Are we to understand that all of those modifications were asked and executed informally, without any addendum to the original contract? If so, unfortunately, your fault entirely. Never do that.

all changes were requested in writing by the client in endless emails and I repeatedly reminded him in writing they were not part of the original quote.

Does that change anything in my favor?

It does in that it gives you evidence. First step would be to compile all those emails in a folder. Also, if you have a team, you can add the minutes of the meetings you held about this project.

Now you can first "kindly" send all this to your client to prove you did what the client asked for. If they still keep their position after that, next step would be a lawyer. Of course in that case, you need to make sure the money in question is worth it, because lawyers are not cheap.

Still, problem with "informal" exchange is that it's likely to be a succession of points (new features, abandoned features) that have not been aggregated and agreed upon anywhere in their entirety. So this is going to be tough.

As I said, never do that again. Ideally, sign addendums when modifications are asked. A more flexible approach, to avoid having to write and sign contract addendums everytime there's a query for change, you can state how the process should work in the original contract: for instance, instead of a full addendum, you can agree on validating any change request using a specification document that you write upon your client's request, send them, and have them validate it before starting new work.

[bdunham7]

And what was the original contract for?  Were updated cost estimates or firm quotes provided--formally or informally--for each add-on?

[Benta]

Why is this thread in "Projects", which is for technical issues?
Move it to "Chat" where it belongs and hire a lawyer.
Thanks.

[DigitalDesigner]

How do I move it?

[Benta]

How do I move it?

You don't. A moderator will probably do that tomorrow. I've reported the thread.

[Cerebus]

Any suggestions to get out of this situation and how to deal with bullies like that?

Don't take any informal legal advice  from anyone here from a country other than your own. What works in one place may be completely wrong in another; people tend to assume that what's normal where they are is normal elsewhere and that leads to assumptions that can be catastrophically wrong. One of my past German colleagues nearly got us into a lot of trouble by blithely assuming that commercial contracts in England worked like commercial contracts do in Germany (They don't, they are totally different, like totally.).

In England you'd probably be on fairly firm ground if you have all the correspondence you claim, but what your position is under Irish law I have no clue. Ask a proper lawyer, or at the very least a trusted, experienced, businessman with experience of the local law. See if there are any fixed fee consultation schemes in place that will let you buy some initial lawyer time and advice for a moderate fee.

[Simon]

I'll move this to general chat. If you quoted against a specific spec you should stick to your guns and requote for the new specs and make sure this is all documented. When anyone first came to me the first thing I did after the first phone call would be to start writing a spec and send it to them, each email would be an update to the spec which would state what I plan to do ani state what information I require.

You do need to consult a lawyer, if you start to give in to changes then you are basically changing the spec you have quoted to.

[ejeffrey]

Thank you both,

Are we to understand that all of those modifications were asked and executed informally, without any addendum to the original contract? If so, unfortunately, your fault entirely. Never do that.

all changes were requested in writing by the client in endless emails and I repeatedly reminded him in writing they were not part of the original quote.

Does that change anything in my favor?

Thank you very much.

You definitely need a lawyer.  A couple hours of legal advice is far less expensive than the invoice at hand and should be enough to get you a fair idea of where you stand. Merely knowing that you are consulting a lawyer may make the client more responsive as well although  the client may have engineers and managers who think they are legal experts and that the law is definitely on their side even if it isn't so clear.

What constitutes a contract is complicated and jurisdiction specific.  Your written communications might constitute a contract that modifies the original or it might not.  In the US I think you would have a pretty good legal argument but it would depend on the specifics of the original contract and probably a lot of other things.  But only a lawyer you hire can evaluate the specifics of the situation and give you sound advice.

Simply reminding the client that this goes beyond the specification is a good start but good communication would also explain the effective difficulty of the changes and the hourly rate that you would bill at.  It's never good to send someone an EUR 18,000 bill they weren't expecting, even if they should have.

[SilverSolder]

Talk with a lawyer -  for several good reasons, including that sometimes, a lawyer writing a letter to the client on your behalf sometimes prompts them into a better negotiating frame of mind.

You should probably prepare to settle for some intermediate amount of $,  if there is a lot of "he said, she said" in the history.

[Ed.Kloonk]

Talk with a lawyer -  for several good reasons, including that sometimes, a lawyer writing a letter to the client on your behalf sometimes prompts them into a better negotiating frame of mind.

You should probably prepare to settle for some intermediate amount of $,  if there is a lot of "he said, she said" in the history.

This. And the lawyer can examine your particular business and help identify potential pitfalls.

What I would like to know, DigitalDesigner, is if you might have something as we do where I live called the Department of Fair Trading. It's a govt organization so when we contact them and how gives various results, but on the whole without providing actual legal advice they can indicate where most businesses and customers come to grief. Do you have anything like that available to you?

[DigitalDesigner]

Thank you,
I don't know because the client is based in Reading (near London) so UK rules would apply.

Anybody know about UK rules?

Thank you very much!!

[tszaboo]

As I have to deal with consultants sometimes, I would like to shed some light on the other side.
Sometimes companies change the scope, and ask for more, or behave badly due to internal communication issues. This happens when you have more than 1 contact person. I had discussions, where I wanted to say "Oh, my manager actually did that without talking to me, that's not right". And when you come to me as an engineer with a bill, the only thing I can tell you is to forward it to our finance department.
So yes, companies can act like a complete idiot.

[jpanhalt]

No one seems to have mentioned a "mechanic's lien."  In the US, that is a powerful tool.  A quick Google shows that UK is similar.

Simply, in the US, a contract for services protects the buyer more than the seller.  If the service can be covered by a mechanic's lien, say a house repair, failure to pay for that service by the buyer or changes to the contract will allow the "mechanic" to put a lien on the whole property, including the land and any improvements.  It's easy to see how that is enormous leverage as it takes precedence over loans and mortgages on the property.  In extreme cases, one can arrange a "sheriff's auction" of an expensive property to satisfy a relatively minor mechanic's lien.  That rarely happens, obviously.

Do some research as to whether you are covered.  Filing such a lien can easily be done by an individual for his work.  If you operate under a business name you may need an attorney.  That requirement varies even by state in the US.

[Cerebus]

Thank you,
I don't know because the client is based in Reading (near London) so UK rules would apply.

Anybody know about UK rules?

Thank you very much!!

No, this is now a cross-border issue and there is no guarantee that "UK rules apply". In fact it just got more complex. Did you have an initial written contract? Did it contain a "choice of law" clause? If it did, which jurisdiction did it pick, UK or Eire? Where were the contract documents signed, the UK, Eire, or "I don't really know, it was all done remotely"?

See how sticky it already gets?

[rsjsouza]

I am also not a lawyer, but with that last piece of information (i.e., cross borders), if you did not designate a jurisdiction near your house to settle any disputes, IME the 18k will quickly be dwarfed by the total bill with airplane/ferry tickets, hotels, lawyer time, etc.

[nctnico]

Tough spot... Probably the simplest way out is to send everything that has been developed so far (files, papers, prototypes) and tell them you halt any development work until the open invoice has been paid in full. This likely forces them to look for someone else to finish the project. This looks like the kind of client you don't want to work for anyway so good riddance. I wouldn't worry about claims so much; you have a clear paper trail on what has been requested from you and you delivered what they paid for (and more). If push comes to shove you can always use your unpaid bill as a counter claim.

In the future make sure that you always quote hours for additional work and have a client agree with it. Developing with a blank cheque doesn't work out very well in most cases. I have become extremely hesitant to take on projects without a clearly defined scope.

[Towger]

IME the 18k will quickly be dwarfed by the total bill with airplane/ferry tickets, hotels, lawyer time, etc.

This is where it lies, legal costs are very high in Ireland, the costs will be even higher as across border.
 
Customer wants Extra Work, Specify Requirements and Quote for work, Receive PO from Customer (or written acceptance if small company dealing with boss), Begin Work.
 
I am in the same country as the OP, a former boss was not shy on taking court cases.    Our standard contract was written by the person who wrote the main text book book on writing technical contracts!  Most clients who did not look at it in detail, but the odd big one with in house legal team did, and had a fit    They were told to take it or leave it.   For 18K the OP would need to forget about the courts.

The main question is, legally, does he have any ground to stand on about breach of contract?

The PO is not on strong ground as he never fulfilled the original contract.  It will cost a multiple of 18K to bring to court, take years and cause more stress than writing off the money.  If you lose a court case you could be out of pocket by +100k.
 

And do I have any obligation to do any more work to deliver the original specs too?

You signed a contract.  But the reality is there is not much the client can do, unless he has deep pockets.

[floobydust]

Is it strictly a lump sum contract? Adding Ethernet for free basically???
I generally avoid these for engineering consulting because clients can be poorly oprganized and the requirements never nailed down. Or there is scope creep and other circumstances that cause cost overruns.

OP your client appears crafty and likely knew how to get more for nothing, and even this dispute he'll have experience dragging things out and knows legal fees, his threats etc. will drag you down, unless you sue including costs.

On the other side, most consultants I have dealt with will not provide any deliverables until fully paid.
Releasing any source documents is a bad idea until you're paid up. Otherwise any other firm can take over your work, while you remain unpaid.