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Ask YC: Legal Inquiry Regarding Client Issue

2 points by iamdave 18y ago

One of the designers on my team had a freelance project that he took on. We're pretty open about letting the guys work on their own stuff. Fridays are free days, and they're welcome to use whatever resources we have with the exception of storage and networked devices for their client projects. We also keep them on a confidentiality lease, they can't talk about internal stuff of our particular company. Anyway, apparently my boy (Jim) was on a subcontract with this client (Bob). From what Jim told me, he asked repeatedly for certain resources from Bob to produce the site, which he never got (webhost info, etc) to effectively produce the site, so when the month was up the client emailed him asking for their initial deposit back, and are threatening legal action if they don't get it. There's no clause in the contract regarding breaches of contract, so our boy should be fine on that front. This is where it gets interesting, Jim wants to counter-sue for loss of time and energy spent producing the site. He also watns to counter-sue for lost wages, as he completed the site weeks ahead of schedule, and simply could not deliver it because the client did not give him hosting details. Does he have a case?

mechanical_fish 18y ago
Obviously you need to talk to a real lawyer. We, the random folks in the audience, can't tell who has what case unless we know what the contract says. It could say anything. And it could say different things to a lawyer than it does to you. If you signed a fixed-price contract, I can't see how you're going to be able to collect more than the total price of the contract, nor can I see how "lost wages/loss of time" comes into it. You're paid based on deliverables. If the site is literally finished except that the client refuses to accept delivery, it's probably fair to bill the client for 100% of the agreed amount, and to sue if they won't pay; otherwise, it's quite likely that the contract says that you're entitled only to the deposit. This is the scenario that deposits are designed for. Again, though, IANAL and I haven't read your contract. The moral here is: Work only so long as your client has a pulse. Ping the client regularly, and if you ping the client and nothing comes back... stop working and start sending out reminders/dire warnings instead ("if you do not send X I cannot do any more work") until the client responds. Contracting is risky work. That's why fixed-price contracts need to be marked up significantly.
noodle 18y ago
i am not a legal professional. but it sounds to me like the same reason that your client is not entitled to the refund is the same reason why your boy Jim isn't entitled to sue for lost time and wages. lesson learned. next time, make sure to state that the down payment is considered a retainer for services provided and is non-refundable. tell jim that he's learned a hard lesson and next time to document his contact with clients and to halt work and inform them that they're delaying timelines if they don't have a pulse. include client delay provisions in the contract.
rrf 18y ago
My advice is before this goes any further down the track of who sues who, Jim and Bob need to have an urgent face-to-face meeting (or telephone call) to try and resolve this amicably rather than wasting their time and money involving lawyers. Don’t worry about what the contract says or doesn’t say – legal precedent picks up on what is left unwritten in contracts. Jim needs to work out a reasonable negotiating position (such as getting paid for the hours actually expended in exchange for handing over the work done to date) and not worry about things like consequential income losses, which are very difficult to recover at law. If after both parties have used their best efforts to resolve the disputes and there is still no agreement; then consult the lawyers.
skmurphy 18y ago
He got an education. The suggestion for a face to face discussion is an excellent one, if he can keep his cool. Don't waste any time suing over what appears to be a small amount of lost time: he would be better served to invest his time finding new clients and being more proactive in future about issues that are preventing him from delivering them results.

2 points by iamdave 18y ago

mechanical_fish 18y ago

Obviously you need to talk to a real lawyer. We, the random folks in the audience, can't tell who has what case unless we know what the contract says. It could say anything. And it could say different things to a lawyer than it does to you. If you signed a fixed-price contract, I can't see how you're going to be able to collect more than the total price of the contract, nor can I see how "lost wages/loss of time" comes into it. You're paid based on deliverables. If the site is literally finished except that the client refuses to accept delivery, it's probably fair to bill the client for 100% of the agreed amount, and to sue if they won't pay; otherwise, it's quite likely that the contract says that you're entitled only to the deposit. This is the scenario that deposits are designed for. Again, though, IANAL and I haven't read your contract. The moral here is: Work only so long as your client has a pulse. Ping the client regularly, and if you ping the client and nothing comes back... stop working and start sending out reminders/dire warnings instead ("if you do not send X I cannot do any more work") until the client responds. Contracting is risky work. That's why fixed-price contracts need to be marked up significantly.

noodle 18y ago

i am not a legal professional. but it sounds to me like the same reason that your client is not entitled to the refund is the same reason why your boy Jim isn't entitled to sue for lost time and wages. lesson learned. next time, make sure to state that the down payment is considered a retainer for services provided and is non-refundable. tell jim that he's learned a hard lesson and next time to document his contact with clients and to halt work and inform them that they're delaying timelines if they don't have a pulse. include client delay provisions in the contract.

rrf 18y ago

My advice is before this goes any further down the track of who sues who, Jim and Bob need to have an urgent face-to-face meeting (or telephone call) to try and resolve this amicably rather than wasting their time and money involving lawyers. Don’t worry about what the contract says or doesn’t say – legal precedent picks up on what is left unwritten in contracts. Jim needs to work out a reasonable negotiating position (such as getting paid for the hours actually expended in exchange for handing over the work done to date) and not worry about things like consequential income losses, which are very difficult to recover at law. If after both parties have used their best efforts to resolve the disputes and there is still no agreement; then consult the lawyers.

skmurphy 18y ago

He got an education. The suggestion for a face to face discussion is an excellent one, if he can keep his cool. Don't waste any time suing over what appears to be a small amount of lost time: he would be better served to invest his time finding new clients and being more proactive in future about issues that are preventing him from delivering them results.