Getting legal advice regarding business contract

[Ari]

Long story short, my company provides services (been doing so for over a decade with no issue). I was contacted (this is all in writing by email) by a third party marketing company wanting to use my services for a client of theirs, no problem, my terms are very simple, minimum four months, after that, they can cancel at any time by giving a months notice (so effectively the minimum time is five months provided they give one month notice at the end of the minimum period).

The guy I was dealing with seemed a bit incompetent to be honest, and he queried the length of contract and I explained again, really simple, minimum four moths, after that, cancel at any time with a month notice period. All happy with that, away we go. Purchase order comes through from their accounting department for four months of supply. All good, and I did reply saying 'no problem, presumably you'll send further POs as we go along?' No answer, but fine, I don't need a PO for my accounting, up to them what they do or don't send.

I invoice at the end of each month. Six months later, having heard no more from them, I get an email - 'Why are you still invoicing us?' I reply because your Business Manager arranged for supply of services on the above basis'. They replied 'Oh, he's left the company (wasn't surprised to hear that), and we only sent you a PO for 4 months so we're not paying for the last two months'.

Basically, as far as I can tell, this guy has set up this deal with me, but their client only wanted four months (which actually I wouldn't have done). He's blithely carried on anyway and commissioned me on the basis of the above, no one more senior has bothered to oversee the deals he was making on their behalf, and now they want me to cover their incompetence.

They're saying that they only sent a PO for four months (true), I'm saying that we had a deal in place that was ongoing till they cancelled it, and they didn't, and their accounting system, POs etc is on no concern of mine (also true).

There are two outstanding invoices (June and July) and they are due to be invoiced again at the end of August for August (and they still should give a month's notice). I've said that if they pay June and July I'll waive the August invoice and the remainder of the cancellation period as a goodwill gesture and we'll move on. Their problem (clearly) is that this original numpty who worked for them only agreed to four months with their client, so their client (quite reasonably) is saying that is all they will pay for. Basically this company wants me to swallow the loss for their mistake in not overseeing this guy and what he was doing.

At this stage, what I could really do with is legal advice to say either confirm that they are in breach of contract with me (which they are), or whether the PO that they send for the first four months and then didn't follow up with any more trumps the contract they originally set up.

I really don't want to waste too much time on this, is there any kind of online solicitor who would be able to give me an hour of their time on the phone (happy to pay, obviously)? I don't have a business solicitor as I've simply never needed one until now and my personal solicitor doesn't do business stuff.

If I'm sure of my footing then I'll just make a small claims court claim, but I want to make sure I'm not wasting my time.

[Johnniem]

Have you still been providing the service? Do you have a formal, signed contract detailing that one months notice will be required after four months?

IANAL but the fact that they asked for four months service might be deemed to be four months notice by a judge? Maybe a lawyer will come along soon but they would need to see fine details of the contract entered into. If you haven't been giving the service then walk away and don't think about it again, you've lost nothing. Different if they have been taking your services but don't expect to pay.

JM

[Ari]

The service has been (and is still being) provided.

There isn't a formal signed contract, I simply email my clients with the deal, they say 'yes please', send me what I need and off we go, me emailing them an invoice at the end of every month till they give a month's notice.

It's worked fine so far because (apart from this instance) the companies and people I deal with are professional normal companies (and to be fair, I think this one is, but they obviously employed someone who was incompetent and then didn't oversee the deals he was arranging).

[Mr Pointy]

Have you actually been providing any services for the last two months?

TBH you knew you had PO for only four months & I would have at least chased up for a new PO when that ran out.

[Ari]

Yes I have been providing the service.

Possibly I should have, but as mentioned, the PO is for their benefit, not mine. I just need to provide the service, send them and invoice and for them to pay it. We had an agreement in writing, I carried out my side of it.

Of course that is my view, and theirs is the opposite, which is why I could do with 1/2 chat with someone who knows about this stuff.

[fat80b]

Mr Pointy said:

I would have at least chased up for a new PO when that ran out.

Same - IANAL, but in my world (software services etc), I would say it's the PO that defines the service / length that you have agreed with the client. And that a new PO should have been raised for a continuation beyond the original one. That's what we do with our suppliers - Continuing to supply the service without a PO in place was a risk that you took which has now gone wrong.

You might believe that the email and agreement forms a contract / commitment, which it may well do, but you now have to prove this when the PO only states 4 months.

I'm not sure that it matters who is right or not, as it sounds like a he said / she said argument that probably isn't worth getting into (unless the 2 months worth of service is way more than the cost of engaging a lawyer).

[fat80b]

Ari said:

There isn't a formal signed contract, I simply email my clients with the deal, they say 'yes please', send me what I need and off we go

This is probably a mistake.

You might want to use this as an opportunity to improve the contract situation.

I'd consider putting together a proper contract that you get the client to docusign. In this, you can include your terms of business in a more formal way - This way, if this does ever happen again, you might have a stronger position to defend and can then send the new person the signed contract (with terms included) to demonstrate clearly what they have committed to.

[Tye Green]

IANAL but it seems that you consider your initially offered terms to be more significant than your subsequent acceptance of his revised order.

you said "you can have my service for £100 per month for a minimum of 5 months" and he replied with "I would like to buy your service for £100 per month but only for 4 months, here's my order". You then accepted his revised order but continued to provide the service and send out invoices

[Ari]

fat80b said:

Same - IANAL, but in my world (software services etc), I would say it's the PO that defines the service / length that you have agreed with the client. And that a new PO should have been raised for a continuation beyond the original one. That's what we do with our suppliers - Continuing to supply the service without a PO in place was a risk that you took which has now gone wrong.

You might believe that the email and agreement forms a contract / commitment, which it may well do, but you now have to prove this when the PO only states 4 months.

I'm not sure that it matters who is right or not, as it sounds like a he said / she said argument that probably isn't worth getting into (unless the 2 months worth of service is way more than the cost of engaging a lawyer).

It may well do is the point I need advice on from a lawyer. If the answer is 'yes' then it's a fairly simple online Small Claims Court job.

To be honest, it's not a life changing sum of money by any means and I could just shrug it off, but they're taking a very high handed 'we're the big company, we set the rules' attitude and I'm afraid that rather gets by back up.

Arguably I should have chased it when I didn't get the next PO, but I don't see that as my issue if they chose not to send one (or more accurately, didn't realise that one of their managers had agreed to a deal with me, but not with the end user of the service), and they need to step up and sort this out.

How that plays out legally, however, that's the question I'd really like answered before I spend more time on this.

[Ari]

Tye Green said:

IANAL but it seems that you consider your initially offered terms to be more significant than your subsequent acceptance of his revised order.

you said "you can have my service for £100 per month for a minimum of 5 months" and he replied with "I would like to buy your service for £100 per month but only for 4 months, here's my order". You then accepted his revised order but continued to provide the service and send out invoices

That is one way of looking at it, and that might well be the legal way, in which case I'm stuffed.

The other way is, we agreed a deal, they sent a purchase order for the first four months, there was nothing to say that the service would not be ongoing as per the actual agreement, and the purchase order doesn't countermand the original agreement.

And I don't know which of those is legally correct.

[Mr Pointy]

Do you have any legal advice as part of your business insurance? On mine I think it's an optional extra.

You might try posting this in Speed, Plod & the Law as well as it might be seen by some lawyer types.

[Ean218]

Practically every business I deal with requires a PO number on the invoice or they won't pay.

Every contract is a series of negotiations until agreement is reached and the contract starts to be fulfilled. It is not just what you say you want at the outset. As you accepted the PO, provided the service and sent in invoices the order has been fulfilled according to that PO. Any more invoices referencing that PO will rightly be rejected as there is no more PO coverage.

I'm afraid you will have to live and learn with this one, saying their PO and invoice procedure is not my concern is digging your head in the sand. It is important to know from the outset how a customer's payment system works to make sure you A) get paid and B) get paid in full on time.

[Ari]

A little more info. I did manage to run this by a solicitor this afternoon who (with the caveat of saying he of course he's not seen the actual emails) suggested:

your interpretation sounds correct. In the absence of any other documents or correspondence it will be difficult for them to argue against your terms of business. Put simply, if not your standard terms then which terms? I assume also that you have continued to provide the service that was contracted.

Anyway, my offer of a compromise has been turned down so it will be interesting to see what a Small Claims Court make if it in due course.

[Bertrum]

Technically this comes down to battle of the forms.

In simple terms you made an offer to treat on your terms, they then counter offered with a PO and I imagine their terms and conditions. By completing the work you have then accepted their new offer. Assuming you didn’t formally accept it with a thanks and here is my terms?

Likely that the terms with the PO has some cancellation clause within it that now trumps yours.

If you did acknowledge the PO then that is the final contract, if not then the PO is. Completing the work then solidifies that contract.

I provide the above as big company procurement person who deals with this sort of dispute every week it feels like.

[quinny100]

Any business supplying goods and services to any reasonably sized business or public sector organisation without a purchase order to cover the same is going to have a hard time getting paid.

Did they require you to go through a supplier onboarding process? You may have agreed to their terms as part of that process - one of which is often “No PO - No Pay.

Taking the view that PO’s are for purely for the customers benefit is different to how most businesses treat them. They are in essence the buyers request to supply and agreement to pay. Where I work we don’t do anything without a PO. For longer term contracts pretty much everything is to a fixed term and we send the customer a renewal quote which elicits a new PO for us to invoice against.

[StevieBee]

This all touches on another topic of interest - the extent to which an employee's action impacts on their employers obligations.

Back in the late 00s, we mobilised on a £100k project (Campaign for a Local Authority). We'd bid for the work amongst others and received a PO to the full value. About a month in, I get a call from the Head of Service asking why we'd sent in creative proofs for a campaign she knew nothing about.

The short of it is that the person who appointed us had no authority to do so and the campaign we'd been assigned to provide wasn't needed. The PO wasn't issued via their system. The chap just cobbled something official in Word but to us, looked proper. They initially thought we were in cahoots but once that was proven not to be the case, they agreed to a £20k payment. Given we'd only spent a couple of days on it and were only to going make £30k gross profit on the project, we took the offer willingly.

As I understand it, the errant employee had misinterpreted an informal internal discussion and thought he was showing positive pro-activity. But I always wonder of we'd have had any legal recourse to the full amount.

[Ari]

StevieBee said:

This all touches on another topic of interest - the extent to which an employee's action impacts on their employers obligations.

Back in the late 00s, we mobilised on a £100k project (Campaign for a Local Authority). We'd bid for the work amongst others and received a PO to the full value. About a month in, I get a call from the Head of Service asking why we'd sent in creative proofs for a campaign she knew nothing about.

The short of it is that the person who appointed us had no authority to do so and the campaign we'd been assigned to provide wasn't needed. The PO wasn't issued via their system. The chap just cobbled something official in Word but to us, looked proper. They initially thought we were in cahoots but once that was proven not to be the case, they agreed to a £20k payment. Given we'd only spent a couple of days on it and were only to going make £30k gross profit on the project, we took the offer willingly.

As I understand it, the errant employee had misinterpreted an informal internal discussion and thought he was showing positive pro-activity. But I always wonder of we'd have had any legal recourse to the full amount.

My understanding, and I'm no lawyer, is that if an employee acts on behalf of a company, the company is liable for the actions (unless wilfully fraudulent I guess, like giving his wife a million pound contract to supply a pint of milk for the canteen once a week).

This was the problem in my case, an inexperienced guy, lacking in common sense and acting without proper management oversight. It's understandable that they don't want to pay, but it really is their problem if they didn't train and then supervise their staff properly.

[Ari]

And a bit of good news, after a little sabre rattling on both sides, common sense prevailed and we agreed to split the difference and they have paid half the outstanding which I have accepted as full payment.

Mistakes on both sides, lessons learned, etc.

[Steve H]

I appreciate that this has now been resolved but for future if you have Legal Expenses cover on your business insurance this would have been a good source of help and assistance

[Countdown]

Ari said:

Yes I have been providing the service.

Possibly I should have, but as mentioned, the PO is for their benefit, not mine. I just need to provide the service, send them and invoice and for them to pay it. We had an agreement in writing, I carried out my side of it.

Of course that is my view, and theirs is the opposite, which is why I could do with 1/2 chat with someone who knows about this stuff.

Tbh my view is that the PO is more for the Supplier's benefit. On our website it says something along the lines of "No PO, No Pay"