Are you self-employed? Did you ever take on a job, do the work as agreed and then find that your customer either went missing or came up with some lame excuse for not paying you? You did a bad job. It wasn’t what he expected. You were too slow. He changed his mind. He found someone cheaper.
All those excuses are bullshit. You had a contract, you did what you were asked to do and you’re entitled to be paid. It doesn’t matter if you’re a plumber, a photographer, an architect or a bricklayer. The principles are the same.
It doesn’t matter whether the contract is oral or written. It’s still enforceable under the law, but unfortunately, too many small self-employed people don’t know their rights, so I’m going to lay down a few pointers that people might find helpful when dealing with customers who don’t want to cough up the cash. This isn’t legal advice, because I’m not a lawyer, but I do have a reasonable understanding of the legal issues involved, as well as some of the practicalities.
First and foremost, you need a contract, and it should be in writing. Do not assume , because you’re a friend of the client, or a cordial acquaintance, that he will act in good faith.
At the very minimum, your contract should define the services provided, and it should specify the price agreed and the payment terms. It should also define clearly what the customer has to do so that you can complete your work. For example, if you’re designing a website for somebody who sells footwear, you might need pictures of all the shoes he wants to sell. Those pictures must be of good quality and they must be free of copyright issues. Otherwise you can’t use them. Likewise, because you’re not an expert on shoes, you might want him to provide you with the blurb that goes with the pictures.
A particular difficulty arises when you make a contract with a client who owns a company. At law, the individual and his company are separate ‘legal persons’, and therefore you need to be certain with whom you are contracting. If the client tells you that your contract is in fact with the company, ask him to arrange for a letter of engagement or a purchase order to be issued to you from the company. The company’s stationery should set out its full company name, its business name if it uses one, and the names of the company directors must, by law, appear on the stationery.
You should, if dealing with a company, reply to the letter of engagement and place on record a retention of title clause. So, if you manufacture trainers and you get an order for 10,000 pairs of trainers from your best buddy Joe Jackson, owner of Jackson Footwear Ltd., trading as Shoeless Joe’s, you need to specify that title to the 10,000 pairs will not pass to the purchaser until payment in full has been received by you. If you fail to do this, and Shoeless Joe’s goes into receivership, liquidation or even examinership – your shoes go down the Swanee – they can be sold and the proceeds used to pay preferential creditors, which will not include you.
Once you have delivered the service or product, you are entitled to full payment, but don’t ever enter an agreement where you only get paid once the job is completed. Define payment stages. So much when we get to this stage, so much when we get to that and the balance on final delivery.
Set this all out in an email to your client and get agreement in writing.
When the job starts, keep a note of all conversations with your client, however trivial. Even if you think of him as a friend, he’s now your customer and you have a contractual relationship. It’s amazing how quickly a cordial relationship can deteriorate when money is at issue. You don’t have to be officious and legalistic about it, but you should send little routine emails every time you discuss even the smallest details of the job.
Hi, Fred. Really enjoyed the few drinks last night. We can add in those new pages you asked for, but it will take an extra two days work. Let me know if you still want me to go ahead with the extra work. Also, while I think of it, we’ll need those pictures of the shoes this week or or the job will be delayed. Get on it, will you? Thanks. See you in Mac’s for a pint on Friday.
That won’t offend anyone. If there are pictures involved, the date they were taken can sometimes be an issue. Again, without giving offence, let’s say the shoe pictures turn out to be rubbish and you have to go to the shop, or send a photographer to take some shots there, you should first agree that this is extra work, brought about because the customer didn’t deliver what he agreed to.
Hi Fred. Those pictures aren’t really up to scratch, and as far as I can see, they’re copied from the manufacturer’s website. Do you have an explicit release from the company permitting the use of their images? If not, you’ll have to get new pictures taken, but obviously, there will be a cost associated with that. Let me know what you want to do. I can take the pictures or you can hire another guy to do it. Whichever you prefer. However, we need the pictures this week or the job will be delayed.
Hint. It might happen that your client later claims the pictures were taken on one date, when in fact you know they were taken on a different date. Leave no room for doubt on this. Email copies to him.
Hi Fred. Here are some thumbnails of the pictures we took today at your shop.
Even if your client later claims he never received the emails (and this does happen) you have proof you sent them, and more importantly, you have evidence that you were working diligently on the job.
Contemporaneous notes are extremely important. Confirm every change, however minor, to your client by email. A client with integrity will take this as a sign of your professionalism. A client who objects is one you should not be working for. I can’t emphasise enough how important contemporaneous notes are, because you might well end up in court, and I know this is where many people recoil. This in fact is why so many self-employed people go unpaid. They’re afraid to hit the nuclear button and sue, but they shouldn’t be. If you have done all the things I described here, you need have no fear of going to court.
You will win. What’s more, the other guy will end up paying your fees, your lawyer’s fees, your expert’s fees, his own lawyer’s fees and the costs of any expert he happened to bring. You should not gloat about this in public too much. A little will be fine.
A customer who reneges on a deal will very often look shifty and dishonest in the witness box. He’ll mutter, he’ll stumble and he’ll put his hand in front of his mouth, unconsciously trying to stop the lies he’s telling. He may well invent incidents that never happened, such as a fictitious altercation, but provided you maintain a constant stream of friendly emails, this sort of problem can be avoided at source. In any case, judges are skilled at spotting untruthful witnesses by their demeanour and body language. If you have your records straight, you need have no fear, and if the other guy is telling porkies, he will be exposed. I’ve seen cases where a judge went though people’s evidence line by line and rejected every sentence. Sometimes, it surprises me that such witnesses are not arrested for perjury.
In a similar vein, keep careful note of your phone records. Some customers will claim that they never heard from you for months, and phone records can be useful in challenging such statements.
It may happen that you need to bring in an expert witness. If you do, make sure to employ a person who is firstly a genuine expert and secondly, independent. A witness with no axe to grind carries great weight in a court of law, especially when up against a witness for the other side who might be in some way related to the defendant, or who might have been employed by them.
For instance, let’s say Fred hired me to fit a bathroom, but fired me because he could get his cousin to do it for less money. I hire a plumber I don’t know from Adam, and he gives evidence about my work. His word will carry far more weight than that of the guy who did the job after I got the sack. Why? Because he has no vested interest in the case. No axe to grind. He is an honest broker and the court will treat him as such.
Hire independent experts and pay them. Don’t try to DIY it.
Don’t be afraid to go to court. If anyone tries to stiff you on a deal, sue their ass.
[NOTE: This is one of those posts that evolve organically. If anyone makes a useful suggestion, I’ll incorporate it without flagging the change.]