Rights to cancel contract of work due to late payment

Hi there,
I am a freelance motion graphics designer and entered into a contract with a client in February 2013. I agreed to work for a set fee for the work, which would be paid in stages and a royalty payment to be payable on the sale of each 100 units sold.

The contract stated that payment of the royalties would be 30 days. However the other work was not specifically referenced. I sent an email requesting that my invoices for the body of work be paid within 14 days to which client said "should" be fine and will normally be within 7 days anyway.
There have been many stressful problems with this client but to keep to the point after sending polite reminders and trying to reach him on the phone I eventually received full payment 49 days after my invoice was sent.

I have since made some checks and found that this person has been director of 7 companies - all of which have been dissolved after about a year and am concerned that even if I continue work, I will never see the royalties due if he dissolves this company also.

After going to Citizens advice I decided to terminate the contract of work due to breach of contract regarding payment.
The client has become very threatening, saying that 'no court in the land would accept barely 2 weeks (well 19 days actually) as late payment. That my 'incessant' emails requesting payment amounted to harassment - (I have always remained professional, never threatening and left a few days at least between emails as he did not reply.) and that if I do not reconsider it will prove extremely costly for me as he will seek all legal advice available to enforce me to carry out the work that I am 'contracted' to.

The contract also has a mistake on it, stating 'all work must be completed by 31st December 2012', when the start date of the contract began in February 2013.

Would this be enough for me to break free of him, or does he have any leg to stand on whatsoever in carrying out his threats to take me to court?
Thanks in advance for any advice, I have been making myself sick with worry.

Hi Natalie :)

Interesting question, we will attempt to offer some insight but please remember, this does not constitute legal advice and if any doubt you should speak to a reputable commercial solicitor.

Natalie wrote:

Hi there,
I am a freelance motion graphics designer and entered into a contract with a client in February 2013. I agreed to work for a set fee for the work, which would be paid in stages and a royalty payment to be payable on the sale of each 100 units sold.

The contract stated that payment of the royalties would be 30 days. However the other work was not specifically referenced.

With you so far...

Natalie wrote:

I sent an email requesting that my invoices for the body of work be paid within 14 days to which client said "should" be fine and will normally be within 7 days anyway.

Was this email exchange before or after the work had commenced?

Natalie wrote:

There have been many stressful problems with this client but to keep to the point after sending polite reminders and trying to reach him on the phone I eventually received full payment 49 days after my invoice was sent.

Ouch!

Natalie wrote:

I have since made some checks and found that this person has been director of 7 companies - all of which have been dissolved after about a year and am concerned that even if I continue work, I will never see the royalties due if he dissolves this company also.

This is a concern as the individual in question is either a very bad serial entrepreneur, or they specialise in "Phoenix-ing" companies to the detriment of creditors (like you).

Natalie wrote:

After going to Citizens advice I decided to terminate the contract of work due to breach of contract regarding payment.

In our experience late payment alone may not be enough to argue breach of contract. But without having seen the contract it is impossible to say for sure. This is a question for a solicitor.

Natalie wrote:

The client has become very threatening, saying that 'no court in the land would accept barely 2 weeks (well 19 days actually) as late payment. That my 'incessant' emails requesting payment amounted to harassment - (I have always remained professional, never threatening and left a few days at least between emails as he did not reply.) and that if I do not reconsider it will prove extremely costly for me as he will seek all legal advice available to enforce me to carry out the work that I am 'contracted' to.

Wow... OK so to clarify, if no payment terms were agreed in advance (Ie. before the work commenced) then the act states they revert to a default of 30 days. So 49 days is still late.

Secondly, we understand it is impossible to "harass" a Ltd company as UK statute only refers and applies to individuals.

Finally, threats of extreme cost. Again as far as we are aware you cannot be obligated to continue however the debtor may then have a claim for breach of contract and damages. This is a concern and we would really recommend getting a solicitor to review the contract as soon as possible, if only to settle your nerves.

Natalie wrote:

The contract also has a mistake on it, stating 'all work must be completed by 31st December 2012', when the start date of the contract began in February 2013.

Would this be enough for me to break free of him, or does he have any leg to stand on whatsoever in carrying out his threats to take me to court?
Thanks in advance for any advice, I have been making myself sick with worry.

Given what you have said we are leaning towards this being bluster on behalf of this company. But if you are concerned you should have the contract reviewed as a matter of urgency.

Ask friends and family and see if anyone knows a solicitor who may be willing to review it free of charge.

Alternatively, you could offer to complete the work on a pro-forma basis with money paid up front (you could even offer a small reduction, say 5% if paid in advance).

Good luck and let us know how you get on :)

Hi,
Thank you for taking the time to answer me.

In answer to your reply:
--Was this email exchange before or after the work had commenced?

I actually started some of the work before the contract was signed (I now know stupidly but a lot of my work is on recommendation and I just tend to get on with it:/)

I have asked him via email to clarify what was included under each 'stage' of work in the contract as things have started to become more vague as to how much work actually needed to be done for each stage for a fixed fee - he hasn't replied to the majority of emails regarding the work. - I realise this should have been done on the onset.

With the last payment problem him initially called me (voluntarily) to say that payment would be made within 7 days and then continued to make up days after that when the money would paid - to making up excuses why he couldn't then pay me yet?!!

I am really hoping that ideally I can close things up with this client as he has been erratic, completely dis-organised, which I won't go on about here but working with him has caused a lot of stress and the thought of having to have anything more to do with him fills me with total dread.

I will make some calls to solicitors ( unfortunately don't have any contacts in that field:/)
And have learned a hard lesson not to be as stupid in the future.
Thanks again or your reply.
Natalie

Natalie wrote:

Hi,
Thank you for taking the time to answer me.

In answer to your reply:
--Was this email exchange before or after the work had commenced?

I actually started some of the work before the contract was signed (I now know stupidly but a lot of my work is on recommendation and I just tend to get on with it:/)

We understand completely and its generally a good thing in a supplier that they are willing to get started immediately. But you must always, always agree both costs and payment terms up-front and preferably in writing :)

Natalie wrote:

I have asked him via email to clarify what was included under each 'stage' of work in the contract as things have started to become more vague as to how much work actually needed to be done for each stage for a fixed fee - he hasn't replied to the majority of emails regarding the work. - I realise this should have been done on the onset.

Agreed, getting a defined list of deliverables helps reduce "creep" and ensures everyone is in agreement. Using milestones is also a good idea as it allows for staged payments, as opposed to a single large invoice at the end.

Natalie wrote:

With the last payment problem him initially called me (voluntarily) to say that payment would be made within 7 days and then continued to make up days after that when the money would paid - to making up excuses why he couldn't then pay me yet?!!

Ha! We know that type of "client" very, very well... We recommend a maximum three strikes and out rule. if three promises are broken consider all bets off as the client is showing they really don't value your contribution.

Natalie wrote:

I am really hoping that ideally I can close things up with this client as he has been erratic, completely dis-organised, which I won't go on about here but working with him has caused a lot of stress and the thought of having to have anything more to do with him fills me with total dread.

Given the late payments, you could probably argue for pro-forma. If they want the work, they will pay.

Natalie wrote:

I will make some calls to solicitors ( unfortunately don't have any contacts in that field:/)
And have learned a hard lesson not to be as stupid in the future.
Thanks again or your reply.
Natalie

Don't spend any money now, in our 29 years of experience in situations like this we may have seen one debtor go for breach of contract. We are 99.99% certain its just hot air, but obviously if you are worried getting advice should help.

And you have not been stupid, you have been trusting. Big difference :)