Wrong said Fred
As a specialist contractor, you’re sometimes going to get things wrong. But please don't get it as wrong as Fred (not his real name) did
OVER the years I’ve worked with enough specialist contractors to know most don't get it this wrong, but regrettably an awful lot do. So, I thought it worth sharing this true story to illustrate a few very important points:
- you need to know exactly who it is you’re actually contracting with
- you need to get your contract terms right from the outset
- you need to do what needs to be done when it needs to be done, and
- you need to comply with the terms of the contract
A quick bit of background
We have a facility on our website where specialist contractors can post questions (or you can call or email us too), and we’ll provide some brief initial advice. In this particular case Fred (as I said in the introduction, not his real name) had contacted us to ask for advice about a problem which resulted in him being outstanding £39,000.
In most cases we’re able to offer some meaningful insights and when that leads to us being appointed to act on the specialist contractors behalf it almost always leads to the matter being resolved cost effectively, and a very happy client.
But let’s see what happened to Fred.
It's your decision
Of course, it's entirely your choice as to whether you rush headlong into doing the job without checking these points out, but if you don't check, then this email from me to Fred (which I have reproduced almost verbatim), is the kind of advice you might receive. And my notes for you about my response are in the (square brackets).
Thank you for your email.
I have spent some time looking at what you have sent over and what you have said in your emails. There are several serious issues which you need to consider carefully;
- There appear to be not one, but two separate contracts which are between your company, Company A and Mr Bloggs company, Company B. Even if you were successful in an action, he could easily liquidate that company and you would be left with nothing. (Fred thought he was in contract with Company C, the parent company of Company B and the one with all the assets]
- Potentially you could adjudicate (that needs further investigation), but even if you could and you won, Company A (the company you set up for this job) is a company of straw and they could resist enforcement on that basis, as adjudication is only temporarily binding. (Fred thought having a separate company to do this job was a good idea]
- You say that; ‘the work ended up being completely different to what was originally required’ but do not refer me to any variation instructions, and the like. You need to be able to deal with all the variations and prove your entitlement in accordance with the terms of the contract. (Fred had done very little to record any of the numerous changes that had occurred)
- As regards the terms of the contract(s), they appear to be based on the JCT Minor Works form, but it is incomplete – where are the Conditions? (the contract was a cobbled together mess)
- You describe your payment issue and say ‘…which finally resulted in our sub-sub-contractor refusing to go back to site’. (Unfortunately, that is a breach of contract for which Fred's company is responsible).
- In your email you say; ‘we gave them the option of paying for what had been done to date, then we would return to site to complete the work’. (Unfortunately, Fred's company had no contractual entitlement to issue such an ultimatum)
- And you also say; ‘They refused to pay all outstanding invoices so we wouldn’t go back to site, and they are now claiming we are in breach of contract’. (Unfortunately, Fred's company is indeed in breach of contract by not completing the works).
All in all, my view would be that you face considerable obstacles and costs in securing any further payment from Company B and I would be inclined to try and appeal to Mr Blogg’s better judgement and see if you can persuade him to pay at least some of the costs which you can demonstrate to him.
I am sorry I cannot be any more positive about the potential outcome, but you could easily spend a few thousand pounds on fees which effectively get you nowhere.’
Please don't be like Fred
There is no reason to get it this wrong.
All these issues resulted in Fred's company not getting paid. And he could easily have made matters worse by paying solicitors to act on his behalf and racked up a whole heap of legal costs with no regard for a realistic commercial appraisal of his position.
Sometimes there is no substitute for experience and working exclusively for specialist contractors for the last 28 years you can be sure we know the kind of problems you face, and the solutions that work best.
So, please be sure you know what to do to ensure that you don't end up like Fred.
You can make sure you do get paid by downloading your Free Report: ‘How To Get Paid’ at https://www.streetwisesubbie.com/cfj-how-to-get-paid/
Remember, if you do run into any kind of contractual or payment problem, it will not get better with time. You must take appropriate action as soon as possible. Don’t leave things until it’s too late. As ever, if you need help, whatever your problem, then just drop me an e-mail.
Barry Ashmore is MD and co-founder of StreetwiseSubbie.com which provides business solutions for Specialist Contractors throughout the UK