Delayed Payment, Getting Payed
Nils - Rognerud
things which a lawyer may not tell you (unless you ask):
1. A legal contract is only as good as the people behind it.
2. Even after you win your case in small claims court and you got a judement,
you still have to collect the outstanding money. The courts are not going to
help you collect the money, and if the compnay or business entity you are
are taking to court is a partnership - you may not be able to collect at all.
In some cases this can be used by the bad guys, in their favour - and there
is not much you can do without alot of money and time. I find that a letter
of intent is much simpler and better than a long legal contract written by
a non-programmer legal mind (also signed by the client).
Good luck and welcome to the real world. Please seek your own prof. legal
advise in these matters.
Greg Frazier
Yes, the saga continues. In case you've forgotten, I'm
the yokel you all set straight about taking a job with delayed
payments. I got wonderful advice about not taking a fixed-price
job with a delayed payment. Well, I got talked into taking the
job (!) - the only deal is that this project no longer has a
deadline. So, here's the deal; I have an application to write. It
is a port of a Mac application, for which there is no source code
available. I will be paid in monthly installments starting Sept. 1,
lasting through March 1 ('94!). I start work tomorrow (!!). It is
in my best interest, as a student, to have this thing finished and
out of the way by Nov. 1, so I can get back to dissertation writing
(as long as they pay me in full, this is an ideal situation for me).
I am writing a contract right now - I am looking for something to insert
in this contract that will "guarantee" that the client won't simply
stop paying me, come Nov. 1 when I deliver the final product. The
real kicker is that the amount in question is really too small
for real court... we'd have to go to small claims, where I can sue
for no more than $5k (which would be a loss!). I hope to have
a UCLA lawyer look it over for me.
Re contract: I am attempting to specify in exacting detail
(a) the specs of the program (thank goodness this is a port),
(b) the clients responsibilities (supplying materials, reviewing
intermediate versions of code, anything else?),
(c) finances (payment plus recompense for incidental expenses).
Don't give up hope for me - my contract may still scare this
client away! :-)
--
Greg Frazier fra...@CS.UCLA.EDU !{ucbvax,rutgers}!ucla-cs!frazier
L. Seltzer
#It has to do with what they _agree_ to perform, and what will happen if
#they don't. >In fact, when a party fails to perform, that's exactly when
#a contract is the >most good. If it can be enforced.
It's very unusual to have to go to court. If you have a contract you can
have a collection agency do the collection. If you know someone who has
a business and does collections routinely, they could havdle it for you.
A client would have to be at the extreme end of sleaze to allow things
to go so far that they would have a collection agency chasing them and
still not pay. Personally, I found that calling up a vice president of
the company and yelling at him was an effective route to getting paid.
Calling at home is 5 a.m. is another possibility. The cost of the phone
call was about 65 cents, and no attorneys fees were required. Without
a contract I would have gotten nowhere.
Tim Bomgardner
|> In article <233b6l$i...@travis.csd.harris.com> ti...@rudolph.csd.harris.com (Tim Bomgardner) writes:
|> >In article <CAtI2...@unix.portal.com>, ni...@shell.portal.com (Nils - Rognerud) writes:
|> >|> In reply to your UCLA lawyer looking over your contract, just remember two
|> >|> things which a lawyer may not tell you (unless you ask):
|> >|>
|> >|> 1. A legal contract is only as good as the people behind it.
|> >
|> >that enforce it. Having "good people behind it" is a convenience, not a
|> >necessity.
|> >
|>
|> Nope. A legal contract is only as good as the parties ability to perform,
|> and when either party does not perform, only as good as the parties' ability
|> to pay for "justice." The bottom line is that in a civil dispute, justice
|> costs money. Haven't got any? Then you had better hope that you have a
|> solid case worth a pile, because contingency-fee lawyers won't touch it
|> otherwise.
Nope. The contract has nothing to do with the parties' ability to perform. It
has to do with what they _agree_ to perform, and what will happen if they don't.
In fact, when a party fails to perform, that's exactly when a contract is the
most good. If it can be enforced. There are a number of reasons a contract
may be unenforceable, but ability to "pay for justice" is not one of them. Stop
by the Clerk's office--someone will be happy to explain exactly what you need
to file when and where. If you're confident in your case, and can spend your
time more profitably elsewhere, go ahead and hire a lawyer. His fees will be
recoverable (you DID remember to put that in the contract, too, didn't you?).
Of course, none of this is meant as a guarantee that you will prevail. The
court could very well find against you. You may be the one who is wrong.
In any event, you weren't paying attention. The context for contingency fees was
a small claims judgement that had to be collected, which qualifies as a "solid
case."
TB
Tim Bomgardner
|> I'd have to agree with Bob here... Put simply, the U.S. legal system
|> (particularly civil) isn't worth the powder to blow it to hell (to coin
|> a phrase :-). If you have lots of money to burn then you can generally
|> buy whatever "justice" you like. Of course, if you don't have much money
|> then don't expect such minor issues as right and wrong or legal and illegal
|> to influence the outcome of a civil case.
Then I'd say you have very little direct experience with the system. First of
all, we're not talking about "justice", we're talking about law. Contract law
in particular. I've been through the process four times now (once with a
lawyer), and I'm four for four. The system works. Maybe not perfectly all
the time, but pretty well. Second, "right and wrong" is only relevant in an
abstract sense (like, "it's 'wrong' to break your promise"). What is relevant
is the contract and its terms and the law. Third, "legal and illegal" are
matters for a criminal trial.
|> It's not uncommon for companies with money to use civil disputes to harass
|> the little guys. Usually, their sole intent is to inflict financial stress
|> on the little guy hoping that he'll cut his losses and walk away.
Quite the contrary, it is very uncommon. Most disputes never make it to a
court room. Many contracts provide for arbitration. If you are being
harassed by a frivolous lawsuit, you have recourse. On the other hand, if they
have a good case, maybe you should walk away (assuming they'll let you). If
they don't, stand your ground. If you need a backbone implant, see a doctor.
The courts can't help you with that.
TB
Steve Harmon
: In article <233b6l$i...@travis.csd.harris.com> ti...@rudolph.csd.harris.com (Tim Bomgardner) writes:
: >In article <CAtI2...@unix.portal.com>, ni...@shell.portal.com (Nils - Rognerud) writes:
: >|> In reply to your UCLA lawyer looking over your contract, just remember two
: >|> things which a lawyer may not tell you (unless you ask):
: >|>
: >|> 1. A legal contract is only as good as the people behind it.
: >
: >Not true. A legal contract is only as good as the courts and related agencies
: >that enforce it. Having "good people behind it" is a convenience, not a
: >necessity.
: >
:
: Nope. A legal contract is only as good as the parties ability to perform,
: and when either party does not perform, only as good as the parties' ability
: to pay for "justice." The bottom line is that in a civil dispute, justice
: costs money. Haven't got any? Then you had better hope that you have a
: solid case worth a pile, because contingency-fee lawyers won't touch it
: otherwise.
:
: Bob McIlree
: rm...@well.sf.ca.us
I'd have to agree with Bob here... Put simply, the U.S. legal system
(particularly civil) isn't worth the powder to blow it to hell (to coin
a phrase :-). If you have lots of money to burn then you can generally
buy whatever "justice" you like. Of course, if you don't have much money
then don't expect such minor issues as right and wrong or legal and illegal
to influence the outcome of a civil case.
It's not uncommon for companies with money to use civil disputes to harass
the little guys. Usually, their sole intent is to inflict financial stress
on the little guy hoping that he'll cut his losses and walk away.
--
| Steve Harmon @ AT&T Tridom Marietta, Georgia.
| INET: s...@eng.tridom.com
| UUCP: ..gatech!emory!tridom!srh
| VOICE: (404) 426-4261
|
Paul Petrucelly
>In article <CAtI2...@unix.portal.com>, ni...@shell.portal.com (Nils - Rognerud) writes:
>|> In reply to your UCLA lawyer looking over your contract, just remember two
>|> things which a lawyer may not tell you (unless you ask):
>|>
>|> 1. A legal contract is only as good as the people behind it.
>
>Not true. A legal contract is only as good as the courts and related agencies
>that enforce it. Having "good people behind it" is a convenience, not a
>necessity.
>
>|> you still have to collect the outstanding money. The courts are not going to
>|> help you collect the money, and if the compnay or business entity you are
>|> are taking to court is a partnership - you may not be able to collect at all.
>
>Garnishment of wages? Attachment of assests? Leins? It may be true that _small
>claims_ court won't handle these matters, but so what? Simply file in the
>appropriate court. And a partnership is even easier to collect from than an
>individual or corporation. With a corporation, you are limited to the assets of
>the corporation, unless you pierce the corporate veil. With an individual, you
>are limited to that individual's assets. With a (non-limited) partnership, you
>have joint and several liability.
>
>|> In some cases this can be used by the bad guys, in their favour - and there
>|> is not much you can do without alot of money and time. I find that a letter
>
>lawyer's time, not your time.
>
>|> of intent is much simpler and better than a long legal contract written by
>|> a non-programmer legal mind (also signed by the client).
>
>legal rights. It will record for future reference exactly what each party
>agreed to do. A well-written contract can prevent disputes from occuring in
>the first place. There is nothing at all "better" about a letter of intent
>except perhaps a warm fuzzy feeling that both you and your client are "men
>of good will" who don't need to rely on formal agreements.
>
>|> Good luck and welcome to the real world. Please seek your own prof. legal
>|> advise in these matters.
>
>
>TB
I can only add that I agree with what Nils stated. I have found and been advised
by a lawyer, that to go to court is just not worth it. If you are worried at this
point, don't take the job.....
My lawyer would not take the job on contigency, but then again he believes in
avoiding trouble before it happens.. Why do they want to drag out payments
to next year. If from what you indicate the countract is not that much money
(once again my lawyer felt that anything less then about $20,000 was not worth
going after), why can't they pay on delievery. I also would worry about being
dragged into support for an extended period of time. On a turn key system
I normally get paid within 30 days of billing.
The only point that Nils makes which I question is the letter of intent. I would
write a contract, but I also would keep ownership of the code (do not deliever the
source) until payment is made in full. Do not warrenty the code, and be sure to
get the final acceptence test in November. Do not wait until April for the sign off,
they will change what they want in several months, and you will be doing rework
on the original fee.
I have never been screwed on a contract, I have never had a lawyer draw up the
contract (I do have a lawyer I use for advice), I have always had the specs well
defined, as well as the terms of the signoff, and I have never done any work
for a group I don't trust.
paul
Steven Burnap
: #Nope. The contract has nothing to do with the parties' ability to perform.
Unfortunately, court is not the worst that can happen. When I got out
of school, I got contracting work from a very small software house.
I was young and naive and didn't know about contracts, specs and such
and found myself owed $3000. The president pleeded lack of funds for a
year ("Next week, next week"). Finally I managed to get $300 out of
him at which point the company went out of business.
Steve
Robert J. McIlree
>s...@gatekeeper.mis.tridom.com (Steve Harmon) writes:
>|> I'd have to agree with Bob here... Put simply, the U.S. legal system
>|> (particularly civil) isn't worth the powder to blow it to hell (to coin
>|> a phrase :-). If you have lots of money to burn then you can generally
>|> buy whatever "justice" you like. Of course, if you don't have much money
>|> then don't expect such minor issues as right and wrong or legal and illegal
>|> to influence the outcome of a civil case.
>
>Then I'd say you have very little direct experience with the system. First of
>all, we're not talking about "justice", we're talking about law. Contract law
>in particular. I've been through the process four times now (once with a
>lawyer), and I'm four for four. The system works. Maybe not perfectly all
>the time, but pretty well. Second, "right and wrong" is only relevant in an
>abstract sense (like, "it's 'wrong' to break your promise"). What is relevant
>is the contract and its terms and the law. Third, "legal and illegal" are
>matters for a criminal trial.
>
Justice is the administration of law, and, unfortunate to your argument, is
intertwined to law itself as a practical matter. Legal and illegal behaviors
of plaintiffs and defendants have been used by attorneys for years in civil
cases. The activity itself isn't the issue, the credibility of the party is.
If it's irrelevant to a contract case, why is it so often brought up?
And I'd say you're handing out pretty poor advice by stating that everybody
can be their own lawyer by filing simple little briefs with Clerks, stating
their case before the judge, and waiting for an outcome. Other than small
claims (which is largely an irrelevent venue for business disputes anyway
due to higher amounts involved), lawsuits are best handled by professionals.
It is *not* as simple as you make it appear.
A customer sued me once over a contract dispute. Suffice it to say that he
felt entitled to more services than our agreement stipulated. He made the
mistake of representing himself, filing briefs with the Clerk as you have
described previously. This amateur made numerous procedural errors in his
briefs and wasn't very good at court procedure either. My attorney had him
for lunch, in part because he was wrong but also in part because he didn't
know what he was doing.
>|> It's not uncommon for companies with money to use civil disputes to harass
>|> the little guys. Usually, their sole intent is to inflict financial stress
>|> on the little guy hoping that he'll cut his losses and walk away.
>
>Quite the contrary, it is very uncommon. Most disputes never make it to a
>court room. Many contracts provide for arbitration. If you are being
>harassed by a frivolous lawsuit, you have recourse. On the other hand, if they
>have a good case, maybe you should walk away (assuming they'll let you). If
>they don't, stand your ground. If you need a backbone implant, see a doctor.
>The courts can't help you with that.
>
Oh? Got some facts to back that up? Relatively few contracts provide for
arbitration, which has been a topic of business magazines of late in
reference of ways to cut litigation costs. Motions not directly related to
money (cease-and-desist, injunctions, etc.) certainly *do* occur in a
courtroom. Predatory motions that are usually fatal to little guys (like
injunctions barring sale or further use of a product or process) are brought
all the time.
Whether the little guy violated a contract, patent, or trade secret isn't
the point. Getting clubbed to death by expensive litigation from a much
larger concern has happened, is happening, and will continue to happen. That
is "justice" by checkbook, not a fair trial or due process.
Bob McIlree
rm...@well.sf.ca.us
Tim Bomgardner
|> >s...@gatekeeper.mis.tridom.com (Steve Harmon) writes:
|> Justice is the administration of law, and, unfortunate to your argument, is
No sir. If that were the case, there would be no such thing as unjust laws,
and laws would cover every unjust situation. They often overlap, but courts
administer the law, not justice.
|> intertwined to law itself as a practical matter. Legal and illegal behaviors
|> of plaintiffs and defendants have been used by attorneys for years in civil
|> cases. The activity itself isn't the issue, the credibility of the party is.
I can't figure out what you mean by this.
|> If it's irrelevant to a contract case, why is it so often brought up?
I've never seen it brought up, but suppose it is. The reason most likely is
to demonstrate breach of contract. Otherwise, it has no bearing on a contract
dispute. Which is what we are talking about.
|> And I'd say you're handing out pretty poor advice by stating that everybody
|> can be their own lawyer by filing simple little briefs with Clerks, stating
|> their case before the judge, and waiting for an outcome. Other than small
|> claims (which is largely an irrelevent venue for business disputes anyway
|> due to higher amounts involved), lawsuits are best handled by professionals.
|> It is *not* as simple as you make it appear.
You've lost the context. Small claims court is exactly what we were talking
about. Perhaps it's irrelevent for YOUR business disputes, but as a rule I
keep my accounts receivable balances under $5000. Most contractors I know do
likewise.
As to whether it's poor advice or not, I leave that as an exercise for the
reader. However, it *is* as simple as I've made it appear. I know, I've done
it several times.
|> A customer sued me once over a contract dispute. Suffice it to say that he
|> felt entitled to more services than our agreement stipulated. He made the
|> mistake of representing himself, filing briefs with the Clerk as you have
|> described previously. This amateur made numerous procedural errors in his
|> briefs and wasn't very good at court procedure either. My attorney had him
|> for lunch, in part because he was wrong but also in part because he didn't
|> know what he was doing.
If courts administer justice, then his procedural errors shouldn't have made
much difference. If he was right, he should have won. You won simply because
he was wrong. Or because courts administer the law.
No matter how simple it is, even lawyers can manage to screw it up. I stand by
my claim that MOST contract disputes can be handled without lawyers, even if they
wind up in court, by anyone with half a brain.
|> >|> It's not uncommon for companies with money to use civil disputes to harass
|> >|> the little guys. Usually, their sole intent is to inflict financial stress
|> >|> on the little guy hoping that he'll cut his losses and walk away.
|> >
|> >Quite the contrary, it is very uncommon. Most disputes never make it to a
|> >court room. Many contracts provide for arbitration. If you are being
|> >harassed by a frivolous lawsuit, you have recourse. On the other hand, if they
|> >have a good case, maybe you should walk away (assuming they'll let you). If
|> >they don't, stand your ground. If you need a backbone implant, see a doctor.
|> >The courts can't help you with that.
|> >
|> Oh? Got some facts to back that up? Relatively few contracts provide for
|> arbitration, which has been a topic of business magazines of late in
|> reference of ways to cut litigation costs. Motions not directly related to
|> money (cease-and-desist, injunctions, etc.) certainly *do* occur in a
|> courtroom. Predatory motions that are usually fatal to little guys (like
|> injunctions barring sale or further use of a product or process) are brought
|> all the time.
Again, you've lost the context. The "little guys" we were talking about are the
contractors, and the issue is almost always non-payment or non-performance. And
"predatory motions" are never fatal to anyone. It's the result of the motion,
_if granted_, that may be fatal. And in those cases where the motion _is_
granted, it's because a judge has found cause. For the motions you mention to
be granted, the plaintif has to demonstrate that "irreparable harm" will result
if the motion is not granted. It may be the case that the "little guy" _should_
be enjoined.
|> Whether the little guy violated a contract, patent, or trade secret isn't
|> the point. Getting clubbed to death by expensive litigation from a much
|> larger concern has happened, is happening, and will continue to happen. That
|> is "justice" by checkbook, not a fair trial or due process.
I believe that whether the little guy violated a contract, patent, or trade
secret is exactly the point. If abuses occur, then we should address that as
a seperate issue.
This has gotten quite fas away from the original assertion which it was my
intention to dispute:
That contracts are worthless because
a) you can't afford to enforce a contract anyway, and
b) even if you could, the courts are corrupt.
TB
Larry M Headlund
(dialogue on collection tactics deleted)
>
>It's very unusual to have to go to court. If you have a contract you can
>have a collection agency do the collection. If you know someone who has
>a business and does collections routinely, they could havdle it for you.
>A client would have to be at the extreme end of sleaze to allow things
>to go so far that they would have a collection agency chasing them and
>still not pay. Personally, I found that calling up a vice president of
>the company and yelling at him was an effective route to getting paid.
>Calling at home is 5 a.m. is another possibility. The cost of the phone
>call was about 65 cents, and no attorneys fees were required. Without
>a contract I would have gotten nowhere.
Watch that kind of stuff. In some jurisdictions that would be
called harassment and would muddy the waters. I fully agree with you
in your uggestion on collection agencies.
I have gottened stiffed a couple of times even with a contract.
It is just a price of being in business.
--
Larry Headlund l...@world.std.com Eikonal Systems (617) 482-3345
Unix, X and Motif Consulting Motif on Ascii Terminals!
Mark A. Morrell
lsel...@phoenix.Princeton.EDU (L. Seltzer) writes:
>It's very unusual to have to go to court. If you have a contract you can
>have a collection agency do the collection. If you know someone who has
>a business and does collections routinely, they could havdle it for you.
>A client would have to be at the extreme end of sleaze to allow things
>to go so far that they would have a collection agency chasing them and
>still not pay.
The very FIRST negotiation tactic of most attorneys is to file suit. To
them it's nothing, and doesn't mean that you are going to court. If
your greivance is with an attorney, he won't even take you seriously
until you do file suit. Until this point, they typically ignore you.
(I'm not saying anything about the rest of the world, but this is the
way attorney's begin negotiations -- at least the ones that I have
known.)
> Personally, I found that calling up a vice president of
>the company and yelling at him was an effective route to getting paid.
>Calling at home is 5 a.m. is another possibility. The cost of the phone
And probably illegal. I know it's illegal for collection agencies to
call too early or too late; I'm not sure about the individual (or
company) who is actually owed the money.
>call was about 65 cents, and no attorneys fees were required. Without
>a contract I would have gotten nowhere.
Holding the source code until you are paid might be a better idea than
trying to deal with too many legal problems.
--
mg...@uxa.ecn.bgu.edu Free your mind.
Karl Klingman
>the yokel you all set straight about taking a job with delayed
>payments.
I have been consulting for the last 15 years or so. Free advice,
being worth exactly what you pay for it, may or may not help you
out, but here it is.
I, personally, do a lot of some work for a flat-rate. However,
if you take this kind of work, you had better have an iron-clad
contract, a VERY detailed spec, and you'd better be able trust
your client which doesn't sound like the case here.
>I got wonderful advice about not taking a fixed-price
>job with a delayed payment.
I will, when giving a fixed-price contract, give the client 30
days to test the product, then I give myself time to fix any
bugs or spec variations which might be discovered. After the
test period and any required modifications, they have 0 - 30 days
to pay (depending on the client and often my mood). I retain
all rights and title to the work until I am paid. The point is
that if they really want this product they will also want title
to it, otherwise if they use it you can sue the living sh_t out of
them.
Well, I got talked into taking the
>job (!) - the only deal is that this project no longer has a
>deadline. So, here's the deal; I have an application to write. It
>is a port of a Mac application, for which there is no source code
>available.
If there is no source code, then it's not really a porting issue
at all. It redevelopment of an existing product. It would
be dangerous to think of it as a port, since you will have to
completly redevelop the entire product from the ground up.
>I will be paid in monthly installments starting Sept. 1,
>lasting through March 1 ('94!). I start work tomorrow (!!). It is
>in my best interest, as a student, to have this thing finished and
>out of the way by Nov. 1, so I can get back to dissertation writing
>(as long as they pay me in full, this is an ideal situation for me).
>I am writing a contract right now - I am looking for something to insert
>in this contract that will "guarantee" that the client won't simply
>stop paying me, come Nov. 1 when I deliver the final product.
Here is a clause from my contract. Any spelling error are introduced
here. My comapny name is American Research Group, Inc. (ARG).
XIII. OWNERSHIP OF WORK PRODUCT
The reports, recommendations, specifications, drawings, technical
data and any information contained therein, except as noted in this
article, furnished or used by ARG in connection with its performance
under this Agreement shall become the property of Client upon
completion and payment in full of all invoices. ARG retains title
to all work products until final payment is received. Client hereby
grants to ARG the unrestricted right to retain copies of work
performed by ARG for its records and for any lawful purpose except
as noted in paragraph XII herein. (XII is confidential information
clause).
Client understands and agrees that ARG may employ the use of
its proprietary intellectual property, such as copyrighted software
products and/or patented products owned by ARG, in the performance
of its services under this Agreement.
(bunch of struff relating to definition of intellectual property, etc.
deleted. clause ends with:)
any intellectual property identified as a trade secret of ARG will
remain the property of ARG and shall not be considered work for
hire.
You will note that any work I perform, either for an hourly rate
or fixed-rate bid, is mine until I am paid in full.
>The
>real kicker is that the amount in question is really too small
>for real court... we'd have to go to small claims, where I can sue
>for no more than $5k (which would be a loss!). I hope to have
>a UCLA lawyer look it over for me.
Retain the copyright and all rights and title to the product until you
are paid IN FULL (no ifs ands or buts). If they sell the product without
paying you, since you own it any money derived from its sale is yours,
plus I have a clause where they pay my attorney fees to collect it.
On top of all of that, they are in violation of copyright laws which can
result in jail time.
> Re contract: I am attempting to specify in exacting detail
>(a) the specs of the program (thank goodness this is a port),
I've already pointed out that if there is no source code then it
is not a port, so you'd better not thank goodness so quickly.
>(b) the clients responsibilities (supplying materials, reviewing
>intermediate versions of code, anything else?),
>(c) finances (payment plus recompense for incidental expenses).
> Don't give up hope for me - my contract may still scare this
>client away! :-)
From the way it sounds, you'd better hope it does. On the other
hand, you may be about to learn one of life's little lessons.
--
He who would trade his liberty for | Karl Klingman
security deserves neither. | American Research Group, Inc.
| ka...@arginc.com
John De Armond
>|> 1. A legal contract is only as good as the people behind it.
>Not true. A legal contract is only as good as the courts and related agencies
>that enforce it. Having "good people behind it" is a convenience, not a
>necessity.
>Again, not true. Ever heard of a sheriff's auction? How about
>reposession? >Garnishment of wages? Attachment of assests? Leins? It
>may be true that _small >claims_ court won't handle these matters, but
>so what? Simply file in the >appropriate court. And a partnership is
>even easier to collect from than an >individual or corporation. With a
>corporation, you are limited to the assets of >the corporation, unless
>you pierce the corporate veil. With an individual, you >are limited to
>that individual's assets. With a (non-limited) partnership, you >have
>joint and several liability.
>|> In some cases this can be used by the bad guys, in their favour - and there
>|> is not much you can do without alot of money and time. I find that a letter
>Wrong again. Ask your lawyer about contingency fees. And the time is the
>lawyer's time, not your time.
>|> of intent is much simpler and better than a long legal contract written by
>|> a non-programmer legal mind (also signed by the client).
>Very bad advice. A contract can be used to protect both your and your client's
>legal rights. It will record for future reference exactly what each party
>agreed to do. A well-written contract can prevent disputes from occuring in
>the first place. There is nothing at all "better" about a letter of intent
>except perhaps a warm fuzzy feeling that both you and your client are "men
>of good will" who don't need to rely on formal agreements.
While I can't argue with your advice about having a well-written contract,
I can tell you are a novice in the lawsuit arena. I am not.
Background: Until I burned out a couple of years ago, I specialized
as a bail-out consultant. That is, I went in on computer projects that
were in serious trouble and bailed it out. And usually the company in
the process. My hourly rate is triple digit and the hours long so
serious money was involved. My advice that follows does NOT necessarily
apply to $500 piddling debts that can be collected in small claims court.
Companies that needed my services were typically very badly managed.
That meant they either had no money to pay my bill or they had no
ethical qualms about trying to stiff the little guy. The end result was
I had to pursue collection action against perhaps a third of my clients.
At least until I learned (from my lawyer) how to avoid the problem
alltogether (it is called "billing against retainer"). I would generally
write off any debt smaller than $5,000 and even up to $10,000 I'd
usually do little more than turn it over to a collection agency.
Sherrif's auctions, garnishments, repossessions and so on are fine if
you have the resources to get to that point. and if the client
has anything to take that is not already bound up as collateral to a
superior debt instrument. You may be able to force a client into bankrupcy
but you'll then get in line behind everyone else who has a superior position.
This includes anyone who has a UCC-1 on record older than yours.
It is also fanciful to think an attorney will take a collection case on
contingency. They won't. At least one good enough to win won't.
Among the reasons:
* They know the deadbeat likely doesn't have the free assets to pay the
debt much less legal fees.
* They know the court can blue-line a contract as it pleases (in states
that permit it - most do) and it might just blue-line the contract
into oblivion. (This happened to me once. The judge took it upon
himself to decide my rate was too high (!) and bluelined my bill
down from $20,000 to $5000 before finding for me. I collected
$5000 with over $10,00 legal fees [he bluelined the provision
that the loser pay legal fees too])
* They know that the award of legal fees in commercial litigation is
very rare, not worth the risk.
etc.
I used to use a contract that had pages of wherefores and howevers but
I found it did little other than frighten away good clients.
My later contract simply disclaimed my liability, described my warranty,
delineated intellectual property rights and (the most important part)
sets payment terms as billing against a retainer. That is, the client
pays in advance. Just like a lawyer. My fallback, for those clients
who didn't want to write a check to me upfront, is an escrow agreement.
Viola! No more collection hassles! To answer a predictable question,
I only did cost-plus work. I considered fixed price contracts vastly
too risky for the kind of business I was in.
A good contract will serve your interests if you view it ONLY as an instrument
outlining what you DON'T have to do (liability, etc). Relying on it to
force a certain behavior on the other party is folly.
Following is an article I wrote for "Midnight Engineering" magazine a
few years ago. It addresses this issue in much more detail.
John
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Copyright 1990 John De Armond. All rights Reserved.
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Suing the Bastards
or
What Not to do with Bad Debts
This is one in a series of articles on the subject most midnight
engineers don't want to talk about - what not to do in your business -
particularly when those mistakes end up involving lawyers. Having paid a
life's tuition to the School of Hard Knocks, I hope I can share some
experiences with you and help you avoid a similar fate.
Today's topic is "Suing the Bastards" or "What Not to Do with Bad Debt".
We've all had that occasional small deadbeat that stiffed us out of fifty
or one hundred dollars. Such deadbeats make us mad as hell but there's
not a lot we can do about it. What I want to discuss today is a whole
'nuther matter - the large debtor. The large debtor is one that owes you
maybe five thousand dollars, maybe fifty thousand. The important
characteristic is that it is sufficient money that you can't afford to
walk away from it.
If you've followed my series, you know that the best way to address this
problem it to prevent it in the first place. Simply do not allow a
client to get into you deep. Use the methods I outlined in my article
on the subject.
I find that a lot of consultants take a very cavalier attitude toward bad
debt. The prototypical attitude is "My client would not stiff me - we've
got a good working arrangement. And besides, if he does, I'll just sue
the bastard." Sue the Bastard, eh? It is obvious that none of these
people have ever actually DONE it, they just talk about it a lot.
"Throw the lawyers at them and all your problems will be solved". Too
much L.A. Law.
Reality is starkly different. Over the last 5 years or so, I've
written off about $50,000 in bad debt losses and have paid about
another $30,000 in legal fees prosecuting collections. The scars are
just now going away. Consider this:
I've NEVER lost a collection suit and I've never collected any
significant amount of money!
Welcome to the wonderful world of lawyers. As a colleague once commented
right before a collection suit started, "There are 4 people involved in
this process - you, your adversary, your lawyer and his lawyer. Two of
you will win and two will lose. The lawyers will NOT lose.
The scenario is frighteningly similar in almost every case. I had to
get burned a couple of times before I figured it out. Here's how it
works. This is a condensation of two cases. Some of the details
could only be particular to Georgia. Nonetheless, you'll get the idea.
You sign a contract with a client. You have very tight terms in the
contract. The client is small but looks to be successful, with several
offices and a number of expensive computer systems about. Only later do
you discover that all this stuff is either leased or borrowed. You start
work on the project. Having worked for mostly large corporations, you
are used to net 30 terms so you bill at the end of 30 days and expect to
get paid in another 30. Come 60 days and the client provides an excuse
from the set
{
the check's in the mail,
I need another signature,
money's tight this week,
If you can only let me have the work product, I can get a client to pay,
ad nauseam.
}
So being a good guy and being used to large companies taking more than 30
days to pay, you float the first invoice for another 30 days, you invoice
for the 2nd 30 days and you work yet another month. At the end of 90
days, you get another excuse as to why the first invoice was not paid.
You talk tough but you hate to risk a bad reputation by walking off the
job and you don't want to alienate the client - he's successful, after
all, just look around at all that (leased) equipment- so you work some
more.
At the end of 4 months, reality starts to dawn and you realize that
maybe, just maybe this client IS a deadbeat and he is not going to pay.
Or, as is extremely popular here in Atlanta, the client never had any
intention of paying and was just playing the game of seeing how much he
could get from you before you stopped work. You are probably the latest
in a series of consultants that this creep has burned. You make a
mental calculation of your cash on hand vs. your mortgage, light bill,
etc, (Funny, those same excuses above never work for YOUR creditors.)
and you blanche a couple of shades of white.
So exercising your contract terms, you stop work, pull the
work-in-progress and demand payment in full. You get yet another
variation on old excuses. Meanwhile, you are not working because you've
not had time to schedule another client and anyway, being the eternal
optimist, you believe that the client will pay you at any moment so that
you can go back to work and everybody will be friends again.
Of course, he does not pay so you threaten to sue. He says "Give it yer
best shot." So you do. You find a lawyer whose first words are "That will
be a $5,000 retainer and please, do have a seat, and what was your name
again?". I think they use that line like we use terms like "bytes" and
"compilers" and stuff.
You cash a CD and pay the retainer. Nasty phone calls from the lawyer
don't work (the client is already working his next victim/consultant and
is telling him how badly you screwed the project up.) So the lawyer files
suit. "That'll be another $5k retainer, please."
The client gets himself a lawyer and the first thing he does is file a
counter-suit claiming that the reason he is not paying is because your
work was sorry. This must be a textbook exercise or something because all
attorneys do it. And he'll probably add a kicker or two in the form of a
request for restraining orders against you for a variety of imagined sins
such as non-disclosure, non-compete (which in the form of an injunction
could make you unemployable for awhile.) and the like.
So you, your lawyer, your client and his lawyer go talk to the judge.
(And by now, you can reliably predict when the $5K line will pop up
again.) When it gets real quiet in the court room, the whirring you hear
is the lawyers' meters running overtime. More bucks. Your lawyer will
manage to deflect most of the requests for restraining orders and may get
one or two shots in himself. Why not, after all, his meter's a'running.
The problem is that the restraining order you want the most - to keep the
client from using the work product until the suit is heard - you can't
afford. The reason is that the courts require you to post a cash bond
equivalent to the POTENTIAL damage the opponent might suffer if your case
proves to be groundless. This typically involves BIG bucks. In one case
I was involved in, the client wanted an injunction against US reselling
our product. The bond was $250,000 cash. That cash has laid in the
county clerk's safe for 5 years now - the case is still technically open.
YOU probably don't have that kind of money laying around. And you'll
find that bonding companies don't really like to put money on things
that are not a sure bet.
Meanwhile you have a couple of problems. The court takes the counter-
suit as seriously as it does yours. So you gotta prove that your work
is in conformance with the contract. Your contract had better have a
"generally accepted professional standards" clause in it and preferably
a Definitions section that defines what "generally accepted professional
standards" are. You have to hire expert witnesses to examine your work
and render an expert opinion as to its quality and as to its technical
conformance with the contract. Hope you don't have any messy little code
stubs or unoptimized logic laying around in your work.
The expert witness's job is to first qualify with the court as an expert
(A risk you get to take AFTER he's examined your work and you've paid
him), and then to present your side in the most credible and confidence
building manner possible. (One thing you learn in Expert Witness School
is how to speak to 5th graders - the educational level of your average
jury.) The more degrees, awards, certifications, and gray hairs the
better. They don't have to mean anything but they DO have to impress the
judge. (You wouldn't even THINK of asking for a jury trial would you?
Ever seen a hourly day worker/jurist go tilt when (s)he finds out that
you charged this poor sap A HUNDRED BUCKS AN HOUR FOR 4 MONTHS and all
the work product fits on that one little floppy disk, the same kind of
disk he uses in his Commodore 64? You really don't want to do that.)
This expert witness - a consultant by another name - wants, you guessed
it, a RETAINER against fees. HE already knows how to avoid dead beats,
something you are rapidly becoming. Checkbook's getting a bit
bouncy at this point, isn't it?
While we're on the subject, I want to address another subject. As
an expert witness myself, I've seen a much larger number of suits than
I've actually been a party to. One thing that has been very
consistent in cases where technology is involved is that a "trial
by a jury of one's peers" is a myth. The jury selection process
practically guarantees that the jury will be little more than literate
if that much. Neither side wants jurymen who can think for themselves
and who might not buy their lines. Remember that fact next time
you consider a suit.
But before you get to court, you get to go through "discovery". That's
where the other lawyer asks for every piece of paper you've ever touched
since grammar school and your lawyer does the same against him. You say
"Bullshit" and so does the other guy. The lawyers sit down and negotiate
(meter's a'runnin) a compromise. You compromise by agreeing to provide
every piece of paper you've touched since grammar school... You move
your office files to the opponent attorney's office and your opponent
moves his to yours. Your lawyer will rack up another good $5k retainer
looking over this mass of paper.
The next step is depositions. That's where your lawyer, his paralegals
(smaller meters), you, your opponent's lawyers, his paralegals, a court
reporter (a medium-sized meter) and your opponent sit down in a room and
call each other names for a few days. (remember that 'ole meter's
a'runnin) Meanwhile the court reporter captures every utterance on record
for posterity and $4 a page.
Your lawyer gets to go first. He asks your opponent the standard "name,
rank, and serial number" questions and then after peering solemnly over
his lawyerly half-glasses, says "Mr X, when you were 3 years old and you
got a handful of feces from your diapers and you smeared it all over your
little sister, did you enjoy licking your fingers afterwards?" (His -
your - Private Investigator discovered that tidbit - for more bucks)
Your opponent will say "I'm not going to answer such insulting
questions".
Your lawyer will slide his glasses down to the tip of his nose, peer
over them and say to opposing counsel, "Counselor, please instruct your
client to answer the question". He'll do so. If your opponent still
refuses to answer, the attorneys will call each other names (they have
drinks together afterwards - it's just a game) and maybe they'll pull out
the speakerphone (all lawyers have speakerphones) and call a judge who
will decide whether or not your opponent has to tell whether or not he
likes the taste of crap. This will go on for a couple of days. Then your
lawyer will do the same thing to the other guy's expert witnesses and any
other witnesses they've slated to testify. And then the tables turn and
you get it ALL back. Except that the other lawyer is now play-pissed at
YOU (never at his drinking-buddy) so HE asks YOU if the crap stuck to
YOUR teeth!
A couple of days later, you have a pile of transcripts that are big
enough to use as a printer stand along with a court reporter's bill that
is strictly COD. THEY know how the system works too. You and your
attorney sit down (you know the old $5k line by heart by now.) and
do a post-mortem of the transcripts. You then realize why lawyers ask
you about the taste of crap - it serves as a diversion to make you
drop your guard for when they ask the real questions. The thought
"Did I REALLY say that?" recurs over and over. You spend a LOT of time
trying to figure out damage control.
Your best friend drives you to court because you've hocked the car to pay
the transcription fees. Then you learn that judges work about 30
minutes a day. He puts his 30 minutes in and then he recesses until the
next day. Of course, your attorney bills by the half-day so you get to
shell out some more bucks. It's usually during this time that your
lawyer starts to ask you questions regarding his office computer system.
On YOUR nickel. You ponder the cosmic significance of YOU paying your
attorney to consult to HIM .... and change the subject.
Court is basically a replay of discovery except that the lawyers drop all
references to feces. Your expert gets up and describes your code as
suitable for inclusion in the next revision of K&R. The
other side's expert states that your code looks like it came from a
BASIC-to-C translator and could never POSSIBLY have compiled, much less
run. Meanwhile, the judge interrupts to ask what Eunuchs (Unix?) have to
do with computers. You begin to realize that you are in deep doodoo.
Depending somewhat on which expert has the grayest hair and the most
solemn look, you will generally "win" assuming you've done pretty good
work and your contract is solid. You quickly learn, however, that a
contract is nothing much more than something for the judge to set his
coffee cup on once you get to court. Your lawyer mutters something about
a "Blue Line Statute". You vaguely remember him explaining that it
allows the judge to rewrite your contract after the fact as he sees fit.
In fact, he can enforce, modify or ignore pretty much any part of the
contract at his whim.
The judge orders that you be paid some amount, hopefully what
you are owed if you are lucky. The opposing attorney crosses himself 3
times which is the signal for his paralegal in the rear of the courtroom
to sprint down the stairs to the bankruptcy court and file for his
client's protection. Your lawyer asks for an immediate seizure of
assets order. His lawyer asks for a stay pending appeal. He usually
gets it. So the deadbeat hightails it back to his office to liquidate
any asset he can before the bankruptcy court or you get ahold of it. You
have the right to seize any asset you can get your hands on. The problem
is, you probably won't find anything to seize. Most likely, anything you
find in his office will be leased.
The worst part is that the judge will probably find that there was fault
on both sides and therefore each side is to absorb its own litigation
expenses. (My lawyer once explained it as the concept that if you are
stupid enough to actually come to court, you should have to pay for your
stupidity.)
So here you are. You sued for maybe 20 or 30 thousand bucks. You
collected a few assets not worth more than a couple of thousand dollars.
Meanwhile, you have legal fees totaling perhaps 50 thousand bucks. As you
leave the courtroom, your lawyer is already describing his "easy payment
plan". ($50 per month for life, your first-born as collateral) And since
the trial was a full time job for you, you have no billable work. But
you "won".
In case you are wondering, I have pretty accurately described a composite
of a couple of collection cases I pursued. Two winners and two losers.
Me and my client lost. You KNOW who won. I'm on that
$50-per-month-for-life easy payment plan.
So, you might ask, how does one protect himself? You first forget about
any protection from the legal system. Laws and courts are for those who
can afford them. A collection department headed by a guy named Guido with
a tattoo on every square inch of his body and a collection of Uzis is a
start. Mortars work well, as do light antitank weapons.
But the most effective techniques are preventative ones. Among them are:
* Just say NO to credit. Learn from your lawyer - work only from
retainer.
* For small accounts, consider becoming a credit card merchant. Give
'em their ounce of blood in exchange for the ability to pay the
light bill.
* If the client won't go for a retainer, then demand an escrow agreement.
Have the client pay into an escrow account that you bill against.
If the account is allowed to go to zero, you quit work.
* If the client won't do an escrow, then think long and hard about whether
you really want to do business with the guy. Does he have something
to hide. Judge his actions according to an old maxim: "Everyone
judges others through the reflection of their own character flaws."
* Extend credit only to those companies that have a D&B rating of about
AAAA or better. Even then, try to go for NET 7 or better.
* Build protection into your code in the form of time bombs that are
deactivated upon final payment. DEC calls this a "license manager".
I like that term. DON'T use the term "time bomb" and make damn
sure your client signs an attachment to your contract whereby he
agrees to your use of a timebomb.
* Keep your eyes and ears close to the ground and look for early
warning signs. If you detect any, don't hesitate to demand
additional security such as converting a net 15 client into an
escrow account.
* (This should be obvious but apparently it is not.) Sign a contract
BEFORE you start work. You need a bit more than a handshake to go
on. As my lawyer once said, "Contracts are for when friends are not
friends anymore."
Using these techniques, if you get burned, at least it won't be for much
and you can let 'yer big Uncle Sammie pay for half.
--END--
--
John De Armond, WD4OQC | (Pardon the inconvenience while we
Performance Engineering Magazine(TM) | remodel this .signature)
Marietta, Ga |
j...@dixie.com |
Michelle Stone
>I am writing a contract right now - I am looking for something to insert
>in this contract that will "guarantee" that the client won't simply
>stop paying me, come Nov. 1 when I deliver the final product. The
>real kicker is that the amount in question is really too small
>for real court... we'd have to go to small claims, where I can sue
>for no more than $5k (which would be a loss!). I hope to have
>a UCLA lawyer look it over for me.
Simple. You own the application until payment is made in full.
If they don't pay up on time, you own it. If the sell it, they
violate copyright laws.
Just my 2 cents worth.
Michelle
--
Michelle Stone, Expert Support Inc.
mi...@netcom.com, 408-736-3446 FAX: 415-941-2898
201 San Antonio Circle, Suite 115, Mountain View, CA 94040
David P. Boerschlein
mi...@netcom.com (Michelle Stone) writes:
>
>fra...@oahu.cs.ucla.edu (Greg Frazier) writes:
>
>>I am writing a contract right now - I am looking for something to insert
>>in this contract that will "guarantee" that the client won't simply
>>stop paying me, come Nov. 1 when I deliver the final product. The
>>real kicker is that the amount in question is really too small
>>for real court... we'd have to go to small claims, where I can sue
>>for no more than $5k (which would be a loss!). I hope to have
>>a UCLA lawyer look it over for me.
>
>Simple. You own the application until payment is made in full.
>If they don't pay up on time, you own it. If the sell it, they
>violate copyright laws.
>
But what if the company decides to ignore the copyright laws and sell it
anyway. You still have to hire a lawyer and sue and this may still be
cost prohibitive.
.
--
___ _____________________________________
| \ _ . _| | |
(_|__/_(_|_\/_|_(_| | David Boerschlein (Lockheed - LESC) |
| d...@air16.larc.nasa.gov |
all opinions are my own and not | MS 130 (804) 864-6228 |
necessarily those of Lockheed. | NASA LaRC |
| Hampton, VA 23681 |
"Don't Blame Me -- I voted for | |
Bush" |_____________________________________|
Dave Ihnat
David P. Boerschlein <d...@air54.air54> wrote:
>
>mi...@netcom.com (Michelle Stone) writes:
>>
>>fra...@oahu.cs.ucla.edu (Greg Frazier) writes:
>>
>>>I am writing a contract right now - I am looking for something to insert
>>>in this contract that will "guarantee" that the client won't simply
>>>stop paying me, come Nov. 1 when I deliver the final product. The
>>>real kicker is that the amount in question is really too small
>>>for real court... we'd have to go to small claims, where I can sue
>>>for no more than $5k (which would be a loss!). I hope to have
>>>a UCLA lawyer look it over for me.
>>
>>Simple. You own the application until payment is made in full.
>>If they don't pay up on time, you own it. If the sell it, they
>>violate copyright laws.
>>
>
>But what if the company decides to ignore the copyright laws and sell it
>anyway. You still have to hire a lawyer and sue and this may still be
>cost prohibitive.
Ding. You got the bell; it will *always* be cost prohibitive. I suggest you
consider a tool I use--milestones and incremental payment.
I always ask for a percentage up front; depending on contract size, 25-50%.
Then we mutually agree upon a development schedule and demonstration milestones.
If I can't demonstrate the milestone as agreed upon, the clock stops ticking and
I don't get paid until I meet it. If they don't pay me when we agreed, the
development freezes with me retaining all work-in-progress until they pay.
On small contracts, I prefer never to let the client get into me for more than
what I can tolerate losing--usually, around $1000.
Finally, I always insist on no penalty clauses, and a clause promising
unilateral termination of contract (with reasonable protections, i.e.,
delivery of notification by registered mail or hand-delivery, 14 working days
minimum notice, disposition of outstanding fees, etc.) This has cost me some
(few) contracts, but the alternative is to get in that situation where a
client continues to refuse to admit the project is completed to satisfaction;
and if you don't like it, go to court.
Some variations: Clients may recommend escrow accounts. This is useless for
small ( < $10,000) contracts, because they can lock the account up forever and
not really miss it, while it effectively gives them total control over your
money. For large accounts, it may be useful, but make sure it's just the
incremental payments that end up in the escrow account, not the whole ball of
wax.
If they want--insist on--penalty clauses, and you really want the contract,
counter with balancing performance bonuses. Take the stance that if you've
got to risk something, they have to assume some expense for this.
Make sure you don't give them full design documentation and fully functional
software until you've settled everything. They get what they paid for, but
that's it.
Above all, no matter how nicely the initial contact goes, if by the time it's
necessary to sign the contract you don't have a good feeling about your
relationship, consider whether or not you *really* need this contract. A good
client becomes a good friend; a bad one is cause to rue the day you ever
touched a keyboard...
-----
Dave Ihnat
ign...@homebru.chi.il.us (preferred return address)
ign...@chinet.chi.il.us
John De Armond
>mi...@netcom.com (Michelle Stone) writes:
>>
>>fra...@oahu.cs.ucla.edu (Greg Frazier) writes:
>>
>>>I am writing a contract right now - I am looking for something to insert
>>>in this contract that will "guarantee" that the client won't simply
>>>stop paying me, come Nov. 1 when I deliver the final product. The
>>>real kicker is that the amount in question is really too small
>>>for real court... we'd have to go to small claims, where I can sue
>>>for no more than $5k (which would be a loss!). I hope to have
>>>a UCLA lawyer look it over for me.
>>
>>Simple. You own the application until payment is made in full.
>>If they don't pay up on time, you own it. If the sell it, they
>>violate copyright laws.
>>
>But what if the company decides to ignore the copyright laws and sell it
>anyway. You still have to hire a lawyer and sue and this may still be
>cost prohibitive.
yes. Damn LA Law. It must be that's show's fault for making people
believe the myth of the courts for small business.
(wish I could draw a picture here)
REPEAT AFTER ME:
There ain't no law for the small businessman.
There ain't no law for the small businessman.
There ain't no law for the small businessman.
There ain't no law for the small businessman.
There is no contract enforcement mechanism for the small businessman.
There is no contract enforcement mechanism for the small businessman.
There is no contract enforcement mechanism for the small businessman.
There is no contract enforcement mechanism for the small businessman.
If a client screws you, you're screwed, even with small claims court.
Even if you manage to collect, you will have paid with your time
and your emotional investment.
The small businessman must forget that the courts and lawsuits exist.
I repeat.
The small businessman must forget that the courts and lawsuits exist.
When one learns to govern himself and his business accordingly, he will
not get screwed.
I spent a whole shitload of money learning this lesson. No one should
try to emulate me.
John
--
John De Armond, WD4OQC | For a free sample magazine, send
Performance Engineering Magazine(TM) | a digest-size 52 cent SASE
Marietta, Ga "Hotrods'n'computers" | (Domestic) to PO Box 669728
j...@dixie.com "What could be better?" | Marietta, GA 30066
Richard Threlkeld
>
>
> fra...@oahu.cs.ucla.edu (Greg Frazier) writes:
>
> >Hello yet again.
> > Yes, the saga continues. In case you've forgotten, I'm
> >the yokel you all set straight about taking a job with delayed
> >payments. I got wonderful advice about not taking a fixed-price
> >job with a delayed payment. Well, I got talked into taking the
> >job (!) - the only deal is that this project no longer has a
> >deadline. So, here's the deal; I have an application to write. It
> >is a port of a Mac application, for which there is no source code
> >available. I will be paid in monthly installments starting Sept. 1,
> >lasting through March 1 ('94!). I start work tomorrow (!!). It is
> >in my best interest, as a student, to have this thing finished and
> >out of the way by Nov. 1, so I can get back to dissertation writing
> >(as long as they pay me in full, this is an ideal situation for me).
> >I am writing a contract right now - I am looking for something to insert
> >in this contract that will "guarantee" that the client won't simply
> >stop paying me, come Nov. 1 when I deliver the final product. The
>
> If it is fixed price with no deadline and you are going to be contractually
> bound by it, I would be more concerned that the company might force you
> to keep working on it for free for the life of the software (10 - 20 years
> maybe). It would be like being in slavery. Whatever you decide on for
> a contract, you might want to pay a lawyer to edit it for you before you
> sign it.
Make a statement of deliverables which lists exactly what is required
and who can accept it and how long after you deliver they have to
accept it. If they do not give you a written list of exceptions
within the time limit, they must pay. List all the functionality
that you are copying so they don't find some weird feature of the
original software (when I hit BS five times in two seconds then
press the F2 key, it does xxxx) that you didn't implement. Point
out that, although you write excellant, clean software, that it
is inherent in software that some "bugs" will appear. Specify for how
long a period you will correct any such that they find (30 days, 90 days,
6 months, and 1 year have been appropriate for different projects).
Mention that after that the given time, you will be glad to negotiate
a contract or retainer to provide any fixes or enhancements they
require.
Its tough to balance too much detail with too little. Though it is
true that a contract may not be enforceable because of economics or
the need to keep the client for the longer term, I have found that
pointing to a clause in a contract that they signed will generally
convince your client to "do the right thing". I rarely do business
(and never repeat business) with unethical guys, but sometimes
their boss wants to do things differently than the contract or
they legitimately remember the agreement differently. The written
word here helps a lot.
-------------------------------------------------------
r...@softin.lonestar.org (Richard Threlkeld)
Don't pay any attention to that man behind the curtain. (Oz)
Mark C Bildsoe-2
>There ain't no law for the small businessman.
>There is no contract enforcement mechanism for the small businessman.
>If a client screws you, you're screwed, even with small claims court.
>Even if you manage to collect, you will have paid with your time
>and your emotional investment.
>The small businessman must forget that the courts and lawsuits exist.
>When one learns to govern himself and his business accordingly, he will
>not get screwed.
>I spent a whole shitload of money learning this lesson. No one should
>try to emulate me.
>John
John,
Here's some valuable advice that I'll give you for free.
(others are free to listen in ...)
Use mandatory arbitration in all contracts. "They" say that in a normal
court of law, small business owners win 50% of the time.
That's why many call it a crap shoot ....
But binding, mandatory arbitration is low cost and rarely requires lawyers.
You just call up the mediation (arbitration) center and schedule
an appoiintment (usually a few weeks compared to months or
years in the courts); pay the arbitration fee ($100-$300);
and appear on the day in question. Most arbitrators are
lawyers themseleves, but many are business owners themselves. The advanatge is
that arbitrators aren't tied up with legal
precendence or rules of evidentiary -- most just "do the right thing"
But, as you say, if the other person is a scum, you will be screwed just because
of the hassles involved.
Free advice #2: As mentioned by others, it really helps to be able to
point to a contract clause that explicitly covers your point of
disagreement.
-mb
Tony Konashenok
my wife got burned recently.
Imagine that you *finally* got paid. So, you are trying to cash this check,
and IT BOUNCES. You call your customer, and it turns out that the senior
partner has disappeared. Yes, left all his belongings in the office and just
vanished. And took all the cash along with him. However, this is an UNLIMITED
partnership, so partners are liable with all their assets.
Generally, this is a clear opportunity to sue. The amount in question allows
to file in small claims court, and doesn't allow to hire a lawyer... Any ideas
on how to do it better? BTW, writing a rubber check seems to be a federal crime.
Should we push the criminal charges?
--
Tony Konashenok a...@hafnium.cchem.berkeley.edu (510)843-5632 (home)
University of California, Berkeley (510)642-5831 (office)
Strauss research group, Latimer Hall, UC Berkeley, Berkeley CA 94720, U.S.A.
Bill Kish
Very interesting thread!
I am in a similar predicament. After working on a job for 9 months with
monthly invoices (always late payment after multiple phone calls) I excercised
my right to terminate our agreement. At that point, they were already 2 months
behind, with two invoices in the pipeline they owed me 4months and many
$1000s...
I was finally able to get the client to agree to pay the outstanding balance
(Involved lawyers, etc) and they sent me a signed payment schedule and a 1st
installment check. Check bounces.
Calling the president of the company yields "Go ahead, sue me. I've
been sued before
and there's nothing you can do." Unfortunately almost everyone I've spoken to
agrees.
After speaking to state authorities they told me flat-out that the state (NJ)
will not get involved in disputes between companies. Your federal angle
now sounds
very interesting to me. Especially since the rubber check was sent
across state lines!
If you know of any federal agency that would be willing to expend some
effort, please
post what you know!
-Bill Kish
----------------------------------------------------------------------
" I am not an employee if IBM. I speak only for myself!"
Paul J Menchini -- Personal Account
>
>Imagine that you *finally* got paid. So, you are trying to cash this check,
>and IT BOUNCES. You call your customer, and it turns out that the senior
>partner has disappeared. Yes, left all his belongings in the office and just
>vanished. And took all the cash along with him. However, this is an UNLIMITED
>partnership, so partners are liable with all their assets.
>Generally, this is a clear opportunity to sue. The amount in question allows
>to file in small claims court, and doesn't allow to hire a lawyer... Any ideas
>on how to do it better? BTW, writing a rubber check seems to be a federal crime.
>Should we push the criminal charges?
Do you want to punish the skipee, or get your $? Once you answer this
question, the answer to your question is clear (to me).
My advice is to get your money and let the other partners get the skipee.
--Paul
--
Paul Menchini email: me...@rock.concert.net "Pay no attention to
2 Davis Drive voice: 919-990-9506 that man behind the
P.O. Box 13036 fax: 919-990-8561 curtain!"
RTP, NC 27709-3036 -- The Wizard of Oz
John De Armond
>Imagine that you *finally* got paid. So, you are trying to cash this check,
>and IT BOUNCES. You call your customer, and it turns out that the senior
>partner has disappeared. Yes, left all his belongings in the office and just
>vanished. And took all the cash along with him. However, this is an UNLIMITED
>partnership, so partners are liable with all their assets.
>Generally, this is a clear opportunity to sue. The amount in question allows
>to file in small claims court, and doesn't allow to hire a lawyer... Any ideas
>on how to do it better? BTW, writing a rubber check seems to be a federal crime.
>Should we push the criminal charges?
(Haven't I seen this post before?)
YES, push the hell out of the criminal side. The state pays for criminal
prosecution; you have to pay nothing. The spectre of possibly a felony
conviction hanging over the head of the remaining partners will likely
persuade them to pony up the cash.
The only problem you may have is getting the prosecutor to run with the
case. I'd suggest buying an hour of a lawyer's time and get the scoop.
If the prosecutor won't take the case right off, you may have to take
out a warrant and even resort to some adverse publicity against the
prosecutor's office. A local attorney should know how things work around
your courthouse.
John De Armond
> I am in a similar predicament. After working on a job for 9 months with
>monthly invoices (always late payment after multiple phone calls) I excercised
>my right to terminate our agreement. At that point, they were already 2 months
>behind, with two invoices in the pipeline they owed me 4months and many
>$1000s...
> I was finally able to get the client to agree to pay the outstanding balance
>(Involved lawyers, etc) and they sent me a signed payment schedule and a 1st
>installment check. Check bounces.
> Calling the president of the company yields "Go ahead, sue me. I've
>been sued before
>and there's nothing you can do." Unfortunately almost everyone I've spoken to
>agrees.
Let me follow up my previous post with something that happened to me that
I learned a lesson about the hard way. If the payor tells you at the time
he gives you the check that it may be bad, he is legally no longer
criminally liable. At least in Georgia. This fact apparently isn't well
known amongst honest businessmen but was familiar to my lawyer.
> After speaking to state authorities they told me flat-out that the state (NJ)
>will not get involved in disputes between companies. Your federal angle
I ran into that too. The next step here was to swear out a warrant for
the perp's arrest. In Georgia, that involved presenting my probable
cause evidence to a magistrate who decides on the warrant based on
the probability that a crime was committed. Took me about 15 minutes
and I didn't need a lawyer, though I consulted mine beforehand just
for general info. If the prosecutor still won't move on the case
you can file a motion to compel. Of course, right about here is when you
start writing checks to a lawyer. But just having a sherrif's deputy
(if you buy him a box of donuts, he might even use lights and siren)
come into this guy's business or house, slap the cuffs on, read him
his rights and cart him off is enough to make him reconsider the bad
check. Was in my case, at least.
Jan Allbright
I've been following this tread for some time now and notice something
that I'm curious about...
If you have a customer with a late pay record, why do you continue to
extend "extended" credit to them? What late pay clauses do you have
in you agreement or contract? How can you go for "months" without
a payment?
It seems to me that while you are being taken advantage of, you are
not protecting youself very much up front ..... What about D&Bs or
TRWs on these companies?
JM$.02
*-------------------------------------+-------------------------------------*
| Mr. Jan Allbright | There is no greater calamity |
| UniSigma Engineering | than to underestimate the strength |
| ja...@sc.hp.com <current> | of your enemy. |
| 71774.671@compuserve <always> | Lao Tzu - Tao Teh Ching |
*----------------------(Opinions Expressed Are My Own)----------------------*
Jim Paradis
: If you have a customer with a late pay record, why do you continue to
: extend "extended" credit to them? What late pay clauses do you have
: in you agreement or contract? How can you go for "months" without
: a payment?
I can think of several possibilities... f'rinstance, there are
several folks out there who are "professional deadbeats". They
have excuse-mongering down to a fine art, and you actually believe
them at first and give them the benefit of the doubt ("gee, our
venture funding is tied up, come back next week..." "We lost
your invoice... oh, here it is! Check's in the mail" "Sorry,
got lost in Accounts Payable, we'll be right on it!"). It usually
takes a few iterations before you catch on to the fact that
they're *never* going to pay you........
Another possibility is that the company simply might be practicing
"aggressive money management" -- calling in their receivables
as soon as possible while delaying their payables until they
threaten to sue. This gives their cash a few extra weeks in the
bank to earn interest...
Still another possibility, especially if one is doing mission-critical
work is the realization that if you walk right now then the company
is *definitely* going to go down the tubes and you'll get nothing,
whereas if you pull their chestnuts out of the fire you *might*
get paid. Slim chance, but epsilon > 0...
--
Jim Paradis (par...@tallis.enet.dec.com)
The purpose of time is to keep everything from happening at once.
It's not working.
Jan Allbright
: Jan Allbright (ja...@sc.hp.com) wrote:
<deleted>
: I can think of several possibilities... f'rinstance, there are
: several folks out there who are "professional deadbeats". They
: have excuse-mongering down to a fine art, and you actually believe
: them at first and give them the benefit of the doubt ("gee, our
: venture funding is tied up, come back next week..." "We lost
: your invoice... oh, here it is! Check's in the mail" "Sorry,
: got lost in Accounts Payable, we'll be right on it!"). It usually
: takes a few iterations before you catch on to the fact that
: they're *never* going to pay you........
I guess it is possible that some of these excuses are valid ...
however accrual of late charges is one way to indicate to these people
that you are serious. If you have a vaild contract and you can show
default of payment, you will previal in court and win a judgement.
Once judgement is in hand you can seize property, lock their doors and
generally trash their D&B.
: Another possibility is that the company simply might be practicing
: "aggressive money management" -- calling in their receivables
: as soon as possible while delaying their payables until they
: threaten to sue. This gives their cash a few extra weeks in the
: bank to earn interest...
These guys are the worst to deal with .... and it seems that the biggest
companies are the worst offenders ... I have a few real horror stories
with C.S.C.
: Still another possibility, especially if one is doing mission-critical
: work is the realization that if you walk right now then the company
: is *definitely* going to go down the tubes and you'll get nothing,
: whereas if you pull their chestnuts out of the fire you *might*
: get paid. Slim chance, but epsilon > 0...
In that case ... and if you want to go out on a limb ... take equity
as partial payment or as security against future payment.
: --
: Jim Paradis (par...@tallis.enet.dec.com)
: The purpose of time is to keep everything from happening at once.
: It's not working.
The question is still on the table ...
Why do you allow yourself to get strung out for multiple invoices?
*-------------------------------------+-------------------------------------*
| Mr. Jan Allbright |For I am a bear of very little brain |
| UniSigma Engineering | ... and long words bother me |
| ja...@sc.hp.com <current> | Pooh Bear |
| 71774.671@compuserve <always> | Tao of Pooh |
Charles R. Martin
: Another possibility is that the company simply might be practicing
: "aggressive money management" -- calling in their receivables
: as soon as possible while delaying their payables until they
: threaten to sue. This gives their cash a few extra weeks in the
: bank to earn interest...
These guys are the worst to deal with .... and it seems that the biggest
companies are the worst offenders ... I have a few real horror stories
with C.S.C.
Yeah. IBM always loses my invoices. The worst of all is DFAS (DoD
etc). We just had to go to our congressthing to get paid on a contract
because someone let the invoice sit on their desk -- and the legal
30-day clock for payment doesn't start until *they* say it does!
--
Charles R. Martin/(Charlie)/mar...@cs.unc.edu/CB #3175 UNC-CH/Chapel Hill, NC
27599-3175/3611 University Dr #13M/Durham, NC 27707/(919) 419 1754(home)/ In
many areas of life and pool, a confident mental attitude is almost as important
for success as luck, injustice, and cheating. -- Robert Byrne
Joe Wells
however accrual of late charges is one way to indicate to these people
that you are serious.
I am currently dealing with a company that routinely refuses to pay late
charges to anyone. Presumably, they start paying the late charges when
there is a serious threat of a lawsuit. I suppose this policy might save
them money overall, since most of their creditors aren't going to threaten
to sue them for paying a week late and not paying late charges. This
policy can be considered taking "agressive money management" to an
extreme.
Currently, the late charges they owe me are less than 0.5% of the total
billing, so I'm not going to sue them over it. See, it works! :-)
--
Joe Wells <j...@cs.bu.edu>
Member of the League for Programming Freedom --- send e-mail for details
Joe Wells
Yeah. IBM always loses my invoices. The worst of all is DFAS (DoD
etc). We just had to go to our congressthing to get paid on a contract
because someone let the invoice sit on their desk -- and the legal
30-day clock for payment doesn't start until *they* say it does!
I'm told by someone who has dealt with a number of federal goverment
agencies that giving a 1% discount on your invoices for payment by some
date works wonders. There are apparently a number of laws/regulations
that require some agencies to take advantage of such discounts and punish
them if they don't.
Charles R. Martin
In article <MARTINC.93...@currituck.cs.unc.edu> mar...@currituck.cs.unc.edu (Charles R. Martin) writes:
Yeah. IBM always loses my invoices. The worst of all is DFAS (DoD
etc). We just had to go to our congressthing to get paid on a contract
because someone let the invoice sit on their desk -- and the legal
30-day clock for payment doesn't start until *they* say it does!
I'm told by someone who has dealt with a number of federal goverment
agencies that giving a 1% discount on your invoices for payment by some
date works wonders. There are apparently a number of laws/regulations
that require some agencies to take advantage of such discounts and punish
them if they don't.
Been there, done that, didn't work. They (1) still conclude on their
own when the clock starts (*not* invoice date like everyone else) and
(2) can -- and do! -- make a determination that it is or is not to the
Government's advantage to accept the discount. In our case, they
didn't.
Also, I've at least heard that they are likely to take the discount and
*still* pay late, epecting you then to whistle for your 1 percent.
Kurt Schweitzer
event of a bankruptcy, creditors stand ahead of shareholders in
the line to get a slice of the company's assets.
Kurt Schweitzer
(716)265-7483
kurt.w...@xerox.com
Jan Allbright
: A recommendation: Don't take equity in lieu of payment. In the
: Kurt Schweitzer
: (716)265-7483
: kurt.w...@xerox.com
True .... but equity is better than nothing... I said as security,
not as a substitute...
JM$.02
*-------------------------------------+-------------------------------------*
| Mr. Jan Allbright | There is no greater calamity |
| UniSigma Engineering | than to underestimate the strength |
| ja...@sc.hp.com <current> | of your enemy. |
| 71774.671@compuserve <always> | Lao Tzu - Tao Teh Ching |
Jan Allbright
: fra...@oahu.cs.ucla.edu (Greg Frazier) writes:
: >I am writing a contract right now - I am looking for something to insert
: >in this contract that will "guarantee" that the client won't simply
: >stop paying me, come Nov. 1 when I deliver the final product. The
: >real kicker is that the amount in question is really too small
: >for real court... we'd have to go to small claims, where I can sue
: >for no more than $5k (which would be a loss!). I hope to have
: >a UCLA lawyer look it over for me.
: Simple. You own the application until payment is made in full.
: If they don't pay up on time, you own it. If the sell it, they
: violate copyright laws.
Also ..... insert a clause as to liquidated damages...such as $100.00
for each day over the drop dead date. What I use is a clause that states
all invoices are due upon presentation. All invoices over 30 days are
considered "late" and have a 15% charge applied. All invoices over 60
days are considered in default and subject to the damage clause..
Try it ... you can never tell
*-----------------------------------+---------------------------------------*
| Mr. Jan Allbright | The Sage is not sentimental |
| UniSigma Engineering |He treats all his people as straw-dogs |
| ja...@sc.hp.com <current> | Lao Tzu |
| 71774.671@compuserve <always> | Tao Teh Ching |
Joe Wells
Been there, done that, didn't work. They (1) still conclude on their
own when the clock starts (*not* invoice date like everyone else) and
(2) can -- and do! -- make a determination that it is or is not to the
Government's advantage to accept the discount.
My understanding is that you don't have to use the
30-days-after-invoice-received method if you don't want to. This is based
on advice from a highly successful business consultant (a relative). He
advised me to specify exact due dates on the invoices, and then use a
reliable delivery method (Federal Express) so I would be able to show
later exactly when the invoice arrived and that there were a reasonable
number of days from the time the invoice arrived to the due date.
But perhaps he didn't know what he was talking about.
Is this one of those things that is governed by the UCC?
??????
John De Armond
>My understanding is that you don't have to use the
>30-days-after-invoice-received method if you don't want to. This is based
>on advice from a highly successful business consultant (a relative). He
>advised me to specify exact due dates on the invoices, and then use a
>reliable delivery method (Federal Express) so I would be able to show
>later exactly when the invoice arrived and that there were a reasonable
>number of days from the time the invoice arrived to the due date.
>But perhaps he didn't know what he was talking about.
>Is this one of those things that is governed by the UCC?
Your friend is right. The governing law is called the Prompt Payment
Act. This law was passed during (I think) Reagan's first administration
in an effort to curb the really gross abuses government disbursment
offices were practicing. It turned my job of collecting from the TVA
from one of daily phone calls and many personal visits to simply sending
in the invoice. From 10 year old memory, the Act specifies:
* The agency has to abide by the terms agreed to in the contract or
on the invoice. If it takes discounts, it must abide by the
discount terms.
* The mail is assumed to work and thus the payment clock starts
automatically a couple of days after the invoice date (depends
on postal service between originator and recipient.)
* The agency must pay all undisputed parts of an invoice in accordance
with the invoice terms and must provide explicit written reasons
for witholding payments for the parts they dispute.
Lots o' other provisions but that gives you a flavor. You might want to
do like I did and contact your congresscritter's field office and
ask the sweet young thing to get you a copy of the Act and any
informational materials that may have been published by the gov't.
Your congresscritter is also usually more than happy to help you
with any violations of the Act.
Charles R. Martin
j...@bigbird.bu.edu (Joe Wells) writes:
>My understanding is that you don't have to use the
>30-days-after-invoice-received method if you don't want to. ....
Your friend is right. The governing law is called the Prompt Payment
Act. ....
Your congresscritter is also usually more than happy to help you
with any violations of the Act.
Precisely -- except that my experience with ARPA/DFAS was that the FPPA
is honored only in the breech *until* you call your Congressthing.
After that, everything was cool.