4 ms·

All this could be avoided, or at least mitigated, by a proper contract? His way of solving the problem sounds awfully close to blackmail to me. Sure, he deserv

by pathy 13y ago

All this could be avoided, or at least mitigated, by a proper contract? His way of solving the problem sounds awfully close to blackmail to me. Sure, he deserves to be paid but is that the right way to go about it? Start with a contract, deliver final product upon receiving the final payment etc. I know that it is not always possible to wait with shipping until you have been paid but, depending on the client, it should be in most cases.

larrys 13y ago
"by a proper contract?" Contract implies you also need a stick which is legal action. Obviously depending on the amount of money involved that might simply not be an option. While not entirely relevant I will bring the following into play, a saying, that goes something like "if you owe the bank $10,000 you have a problem if you owe the bank 10,000,000 the bank has a problem".
- Argorak 13y ago
  This cannot be generalized, as it _heavily_ depends on jurisdiction. OP for example is from the UK. For example (IANAL and everything): In germany, if a client hasn't payed an invoice without challenging it, you can get a court order for payment pretty quickly. The legal fees for this are quite small and paid by the client. All you need is proper documentation of the process. Clients avoid this like the pest, especially if their complaints are not expected hold. Once the court started dunning the other party, most ways of negitation are lost. The first thing I tell clients is: "if there is any problem with invoices, speak to us immediately, if you don't respond we will go the direct legal route." This happens rather often. Most of the time, clients are silent because _they cannot pay_ because of miscalculation or other reasons. Sometimes, they are ashamed because of this. So they try to sit it out until better times - which might never come. Talking to them about paying in slices etc. often helps. But often, you need to bring out the big threats to even get them talking. Also, in any case: if you have the slightest doubt that a client goes towards insolvency, push this as far as you can, especially on the legal side. Insolvency will mostly be handled by order of creditors - try to get your title before everyone else. This might seem hard on a personal level, but this is how it works. For all this, you often don't need a contract as long as there is documentation of the process. A signed offer by the client goes a long way. A detailed contract with further ways is always good in that regard (and should _always_ be in place), especially when it comes to licensing or for clear payment terms. E.g., it handles the following scenario: * A client enters insolvency * It is decided to sell the assets of the company (including the almost-ready software you produced) to a third party (a classic firesale) * Some other creditor has preferred rights to the money, so although your client has money now, it is for someone else. In this case, a contract that regulates that the rights to said piece of software are only the clients once the final payment is there means that the buying party and your client _have to talk to you_ or the deal is off. That could mean that they have to pay you to make the deal happen, giving you preference over all other creditors that want the money out of that deal. And buyers are really careful about such stuff, because anything else involves uncalculatable risk (including you making them loose the full rights on the thing they bought). No legal action on your side involved. I am in the freelancing business for quite a while now and I never took legal action. But I often threatened taking legal action and you better have grounds to back that up and make the other party see a risk to be on the loosing side. Thats the other advantage of contracts: threatening with legal action cannot be seen as extorsion because it works though proper channel. Don't fear the legal system, use that other people fear it. Also, as hard as it may sound: never enter business relationships that you cannot pay the legal costs for.
  - larrys 13y ago
    Good comment but in any case. "never enter business relationships that you cannot pay the legal costs for." More or less would indicate not to enter into a business relationship that is very small which of course does make sense since the amount you would lose is very small. "you can get a court order for payment pretty quickly" Can't speak for the UK but have won court orders in the US. Doesn't mean you will actually get money. Could be entity folds or further delays. Or there are extra time consuming steps required to get the money. Once again, at least in the US. Also in us something called "confession of judgement" but once again can't get blood from a stone or a moving stone. "clients are silent because _they cannot pay_ " Exactly. No money doesn't matter who is compelling what. "don't need a contract as long as there is documentation of the process. A signed offer by the client goes a long way." Agree. A contract is an agreement. Can take many forms and be ultimately enforceable. Doesn't have to necessarily have a degree of formality either. "But I often threatened taking legal action" Would say thought that one thing to consider is that in certain organizations threatening legal action can be seen as a bluff or simply make the recipient able to pass it off to the legal department where it's not their problem anymore and all motivation to settle is lost. What I have found that often works is to be a "pain in the ass" where the person simply wants you to stop pestering.
    - Argorak 13y ago
      Thanks for your comment as well, this is all very true. On threatening: yes, sure. True professionals will invoke lawyers once you speak about them. Tread carefully, most of the times you don't want that.
tjbiddle 13y ago
He stated he has learned from this - it was 7 years ago. > Things have changed since I first started out. I now have systems in place to better protect myself and the client. When I first started out I didn’t have a contract in place or a document outlining deliverables. You live, you learn. It could still happen again but far less likely.

by pathy 13y ago

larrys 13y ago

"by a proper contract?" Contract implies you also need a stick which is legal action. Obviously depending on the amount of money involved that might simply not be an option. While not entirely relevant I will bring the following into play, a saying, that goes something like "if you owe the bank $10,000 you have a problem if you owe the bank 10,000,000 the bank has a problem".

Argorak 13y ago
This cannot be generalized, as it _heavily_ depends on jurisdiction. OP for example is from the UK. For example (IANAL and everything): In germany, if a client hasn't payed an invoice without challenging it, you can get a court order for payment pretty quickly. The legal fees for this are quite small and paid by the client. All you need is proper documentation of the process. Clients avoid this like the pest, especially if their complaints are not expected hold. Once the court started dunning the other party, most ways of negitation are lost. The first thing I tell clients is: "if there is any problem with invoices, speak to us immediately, if you don't respond we will go the direct legal route." This happens rather often. Most of the time, clients are silent because _they cannot pay_ because of miscalculation or other reasons. Sometimes, they are ashamed because of this. So they try to sit it out until better times - which might never come. Talking to them about paying in slices etc. often helps. But often, you need to bring out the big threats to even get them talking. Also, in any case: if you have the slightest doubt that a client goes towards insolvency, push this as far as you can, especially on the legal side. Insolvency will mostly be handled by order of creditors - try to get your title before everyone else. This might seem hard on a personal level, but this is how it works. For all this, you often don't need a contract as long as there is documentation of the process. A signed offer by the client goes a long way. A detailed contract with further ways is always good in that regard (and should _always_ be in place), especially when it comes to licensing or for clear payment terms. E.g., it handles the following scenario: * A client enters insolvency * It is decided to sell the assets of the company (including the almost-ready software you produced) to a third party (a classic firesale) * Some other creditor has preferred rights to the money, so although your client has money now, it is for someone else. In this case, a contract that regulates that the rights to said piece of software are only the clients once the final payment is there means that the buying party and your client _have to talk to you_ or the deal is off. That could mean that they have to pay you to make the deal happen, giving you preference over all other creditors that want the money out of that deal. And buyers are really careful about such stuff, because anything else involves uncalculatable risk (including you making them loose the full rights on the thing they bought). No legal action on your side involved. I am in the freelancing business for quite a while now and I never took legal action. But I often threatened taking legal action and you better have grounds to back that up and make the other party see a risk to be on the loosing side. Thats the other advantage of contracts: threatening with legal action cannot be seen as extorsion because it works though proper channel. Don't fear the legal system, use that other people fear it. Also, as hard as it may sound: never enter business relationships that you cannot pay the legal costs for.
- larrys 13y ago
  Good comment but in any case. "never enter business relationships that you cannot pay the legal costs for." More or less would indicate not to enter into a business relationship that is very small which of course does make sense since the amount you would lose is very small. "you can get a court order for payment pretty quickly" Can't speak for the UK but have won court orders in the US. Doesn't mean you will actually get money. Could be entity folds or further delays. Or there are extra time consuming steps required to get the money. Once again, at least in the US. Also in us something called "confession of judgement" but once again can't get blood from a stone or a moving stone. "clients are silent because _they cannot pay_ " Exactly. No money doesn't matter who is compelling what. "don't need a contract as long as there is documentation of the process. A signed offer by the client goes a long way." Agree. A contract is an agreement. Can take many forms and be ultimately enforceable. Doesn't have to necessarily have a degree of formality either. "But I often threatened taking legal action" Would say thought that one thing to consider is that in certain organizations threatening legal action can be seen as a bluff or simply make the recipient able to pass it off to the legal department where it's not their problem anymore and all motivation to settle is lost. What I have found that often works is to be a "pain in the ass" where the person simply wants you to stop pestering.
  - Argorak 13y ago
    Thanks for your comment as well, this is all very true. On threatening: yes, sure. True professionals will invoke lawyers once you speak about them. Tread carefully, most of the times you don't want that.

tjbiddle 13y ago

He stated he has learned from this - it was 7 years ago. > Things have changed since I first started out. I now have systems in place to better protect myself and the client. When I first started out I didn’t have a contract in place or a document outlining deliverables. You live, you learn. It could still happen again but far less likely.