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contract and payment question

contract and payment question

contract and payment question

(OP)
ok folks, Merry Christmas!

I have a client for whom I did an investigation and wrote a report on the structural status of a house.  He and I talked extensively before meeting about the two levels of investigation I could do - one just telling him general problems and recommendations with no design or calcs or specifics, and a level up where I would design specific fixes for what I found.  He insisted that the first report would be enough.  At the house, he was also adamant that he and his builder buddy could handle the specifics - he just wanted suggestions from me.

Fast forward to his response to my report, where he's all mad that I didn't give him specific repair instructions and calcs.  I reminded him of our conversations about what the report he was buying would get him, and that he signed the contract for the more general report, but he said the report is useless to him and now, he doesn't want to pay me what his signed contract agreed to.  He calls it all a misunderstanding and miscommunication and has asked me to charge him "what I feel is fair".

I'm considering two sides - charging him half fee, because I don't like having a grumpy customer, or charging him full fee because we did talk about exactly how much detail would be in the report, and he did sign the contract.

How much would you charge him?  Full or half?  Keep in mind the overall fee is under $500, that I'm not likely to have him as a client again anyway (my projects tend to be one-shot deals), but that he has a builder friend who recommended me and could potentially pass me work, and that my company is relatively new.

*whew* Thanks!

RE: contract and payment question

Slta
Is this a genuine mis-understanding, or is this guy stringing you on?
 If you feel the miscomunication is genuine, give him a break.
If you feel that he is shining you on, charge him full price and say goodbye.
B.E.

The good engineer does not need to memorize every formula; he just needs to know where he can find them when he needs them.  Old professor

RE: contract and payment question

If what he said is true he should have no problems with you completing a full report and entering into a contract based on a full report with calcs and spec. I would be more inclined to do the the full report for a little less than give a discount, than give a discount on the report he says is inadequate unless there is a miscommunication.

The builder is very unlikely to care either way.   

http://www.nceng.com.au/
"A safe structure will be the one whose weakest link is never overloaded by the greatest force to which the structure is subjected" Petroski 1992

RE: contract and payment question

slta...he's trying to work you.  I've seen that ploy over and over through the years.  He wants to come off to you as being "fair"...that he's willing to pay you something for your trouble 'cause he's a nice guy, but that the report is useless to him.  BS!

Charge him full price.  If your proposal was clear as to your scope of services, he signed it and you did the work...charge for it as contracted.

He will take your work to some other engineer and they will then use your suggestions for a quick, cheap design fix...and he'll probably try to stiff them too.

If you fold, that will probably hurt your work in the future more than standing firm.  Your contractor referral might refer more work to you, but will tell his referral to beat you down on price.

You are already charging what should be a minimum charge for your services ($500).  

This guy is either a developer or he flips houses.

RE: contract and payment question

Ron said it, he's playing you.  If I was you I would just assume that he does this with every professional reslationship and regularly gets significant discounts.  I had a couple of folks try that nonsense when I was first starting and I stood my ground, they paid slow but they paid.  I'd charge him the full amount and put a 14 day due date on the invoice if the contract allows.

David

RE: contract and payment question

Quote:

If your proposal was clear as to your scope of services, he signed it and you did the work...charge for it as contracted.

Absolutely correct.  On the other hand...

If you DID NOT put it explicitly in writing what you would deliver, AND his obligations to pay for services rendered, then shame on you.  $500 is chump change.  Charge what you would feel comfortable with (if anything), snip this off and walk away gracefully.  And never work with this guy again.  Consider this as a cheap learning experience in your new venture.  Won't be the last time.

Hint:  I've learned over the years to add $500 to my contract fees just for the work of writing a good proposal that protects both me and my clients.  It's a very effective filter for those folks like your client.

TygerDawg
Blue Technik LLC
Virtuoso Robotics Engineering
www.bluetechnik.com

RE: contract and payment question

oh, and slta...Merry Christmas to you as well!  Now get back to those Legos.

RE: contract and payment question

(OP)
cheers, folks!  cheers, Ron, will do :D

RE: contract and payment question

(OP)
I sent the bill today for the entire amount.  We'll see if he actually pays.

RE: contract and payment question

slta....give him 30 days, then send a letter that says you are going to pursue payment through small claims court....then do it.

RE: contract and payment question

(OP)
And the fun continues.  Got an email back today that he's "shocked and saddened by this turn of events", ie me insisting he pay for what he hired me to do.  According to him, he's called several engineers who provide the more detailed report for much less than I charge (umm... no, there aren't, and I know most of the folks in town) and that he's showed my report to an architect, with no comments of "this is what she told me I'd get in the first place".  So now the guy is slandering my company and my name to other professionals, all because he refused to pay me what he chose to sign the contract for, and for the price he agreed to!

This is my first experience with this, and honestly, I've worked so hard to get where I am and it has me quite stressed that this guy is going around smearing the hard work I do.

* deep breaths *  What to do?

RE: contract and payment question

Hit fast, hit hard.

Respond that you were far more "shocked and saddened" by his very obvious ploy of reneging on the contract; that you will pursue through Small Claims court if necessary; that you have sought seek legal advice regarding his slandering your name.

RE: contract and payment question

Cut your losses, you can't win from such clients.  Tell him in this new year you have new rates.  Give him option of paying 200% of the agreed amount because this is the new rate. Remind him the billing amount is tied to the report date.  Since the report is dated January of the new year, the new billing policy has gone into effect.  Or option 2, he may without any obligation walk away.

 

RE: contract and payment question

Agree, cut your losses. It's a cheap learning experience for you.

Be careful about sending a letter threatening legal action thru a small claims court. If you don't follow thru, he can turn around and sue you for violation of his rights under the federal debt collection practices and you might end up owing him $1,000 per violation plus attorney's fees.  

RE: contract and payment question

The only thing I dislike more than like dealing with crazy people, is trying to get money out of crazy people who are angry.  If they start heading off the deep end, I cut bait as fast as possible.  If this guy is running around with your report to other people, then he's certifiable in my book.  Who does that to any professional?  

Return his fee, and tell him he's better off with someone else.  The second he says to another engineer that you returned his fee, that other engineer is going to think twice about getting involved.  I know I would.  I've turned away more than one person who's said "yeah I had an engineer but it didn't work out."  (And out of professional courtesy, I always, always, always call the engineer I'm replacing.)  

    

RE: contract and payment question

(OP)
The signed contract says that mediation is to be pursued first.  I'm thinking of giving him 7 days to pay in full or calling mediation, and if he refuses mediation, to go to small claims court.

The problem is that if it gets around that the local girl engineer is a pushover, then I'm going to have to deal with this crap all the time.

And from now on, I'll get a check in hand before I start if I've never worked for them before.

* grrrr *

RE: contract and payment question

Quote (RacingAZ):

Be careful about sending a letter threatening legal action thru a small claims court. If you don't follow thru, he can turn around and sue you for violation of his rights under the federal debt collection practices and you might end up owing him $1,000 per violation plus attorney's fees.
I don't see how such is possible.  If she threatens to sue in small claims court, but later decides it's not worth the time, I fail to see how he can turn around and say "You threatened me but didn't actually follow through, you owe me money for mental anguish."

She's an individual/business trying to agreed upon costs, not a collection agency.

Dan - Owner
http://www.Hi-TecDesigns.com

RE: contract and payment question

slta...pursue it as you've considered.  I agree that since you are in a relatively small market, you have to make it known that you are capable and fair, but you won't be pushed around.

Go for it and good luck.

As for your contract terms...you might want to take a look at them with regard to mediation as a first resort.

In general, if you sue someone in civil court, a judge is likely to order mediation anyway. The threat of litigation packs a bigger punch than the threat of mediation.

If mediation is your first resort, you might be waiting a while to get mediation scheduled or forced.  If you want it as a first resort, then put a time-certain limit on when it will occur.  For instance, you might put a clause that requires payment in 30 days.  If not paid in 30 days, the client must state in writing his objection to the charges in 5 days or waive his right to mediation.  If the client makes written objection, then mediation shall occur within 30 days of the due date of the bill...this way it doesn't drag on.

Check with your lawyer, of course.

RE: contract and payment question

Having dealt with this type before, if you do take it to small claims court. Insist that he pays the money into court.
 I had a customer string me on, then squabble in this manner.
When the judge said to the customer " he did the work, pay the man" the guy paid me with a bad check then left the country.
B.E.  

The good engineer does not need to memorize every formula; he just needs to know where he can find them when he needs them.  Old professor

RE: contract and payment question

As I said before:  "$500 is chump change."  Consider how much your own time is actually worth , then make the decision to pursue that paltry $500.  Or not.  I value my time in the hundreds of dollars per hour, so that helps me clarify a lot of decisions about what to do, and what not to do.

Regarding reputation, YOU actually have the advantage here.  All you have to do is casually mention that you choose not to work with that person.  Ever again.  When the other Folks-Who-May-Get-Screwed-By-That-Guy ask "why?", simply respond that there was a payment dispute and you didn't get paid.  That will be the end of that guy's business venture.  He'll have to relocate to Mars to get away from his reputation as a non-paying deadbeat.

Proof:  I did a substantial amount of robot programming for some hack, who refused to pay his final bill.  Left me short about $1500.  Later, he stopped coming to me and went to the major robot companies directly.  They called me to do work for THEM, which they were doing for HIM, because those robot salesmen believed his cockamamie story about selling dozens of robots.  I told them all the story, without slander or libel, and that I refused to do work directly for him since he didn't pay his bill.  The guy was blackballed in the industry immediately, his business scheme imploded, and he is now probably flipping burgers.

TygerDawg
Blue Technik LLC
Virtuoso Robotics Engineering
www.bluetechnik.com

RE: contract and payment question

(OP)
TygerDawg, it may be chump change to you, but this is the typical fee I work for, doing small residential investigations and reports.  I wish I could charge $1500 but I'd get laughed at.  My projects are usually one-shot deals anyway.

What's got me so frustrated in this is his insinuations that I'm being unethical.  I would never do that - not morally, and besides, I've worked WAY too hard to get where I am to throw it all away.

RE: contract and payment question

If you are really interested in legal action,and I would not encourage it, as legal action just makes money for lawyers and court houses,  I would just put a lein against the property that the report was for.   
But having been involved in a few legal matters I can tell you they are all money losers.  Having a great lawyer can help you sleep at night but in the end you will be poorer.   I would just move on.

Regards
StoneCold

RE: contract and payment question

There's also his credit rating.  Fair target.

RE: contract and payment question

in our small claims court in aust you don't need a lawyer, is this not the same in the USA.  

http://www.nceng.com.au/
"A safe structure will be the one whose weakest link is never overloaded by the greatest force to which the structure is subjected" Petroski 1992

RE: contract and payment question

Cut your losses. Walk away.

V

RE: contract and payment question

This is why my department NEVER does "preliminary" sketches or "bid" designs.

Either we do it full out or not at all!!!  Just gives rise to problems in the future.

Like - "Your original sketch only showed this and I bid it that way".  Well we had not completed all the calcs and found some areas that needed beefing up, etc., etc.

If you offer verbal advice - do it for free.  If he wants a report - full price.  I too learned the hard way.

RE: contract and payment question

PS This is not the end of the world.

If this is the only time this happens to you... you're lucky.

V

RE: contract and payment question

slta...keep going.  My guess is that most of the suggestions to walk away are coming from individuals who work for larger companies.

The guy you're dealing with knows which buttons to push.  He knows that an engineer's license and reputation are paramount...so what does he want to attack?...the things we all fear will hurt our careers the most.

Don't fold.  Take him to small claims court. Tell him in no uncertain terms that if he says anything to anyone in an attempt to impune your reputation that he will next hear from your attorney (if you don't have one engaged, just don't let him know).

File a lien on his property for the services you provided.  In NC you have the right as a Design Professional to file such a lien on real property.  See North Carolina statute, Gen. Stat. §44A-12.

Good luck.  

RE: contract and payment question

I disagree w/Ron.  If it's only $500 - walk away and REMEMBER his name.

By the time you file the paperwork and spend a day in court - you have better things to do.  If it's $5,0000 - that's another story - file against him.

But remember one thing - you might win in small claims court - you probably will.  But getting paid is another thing.  Sure, the court says pay this guy (you) but they DO NOT enforce it.  It is up to you to collect and that can be very hard and frustrating.

Yeah- I won once - still never got paid!!!
 

RE: contract and payment question

never reduce your fee
for jobs this small, demand a retainer up front.
turn the bill over to collection agency and forget about it.

RE: contract and payment question

Sita,
I can attest to what Ron just said, had the same thing happen as I mentioned before.

"" But remember one thing - you might win in small claims court - you probably will.  But getting paid is another thing.  Sure, the court says pay this guy (you) but they DO NOT enforce it.  It is up to you to collect and that can be very hard and frustrating.

Yeah- I won once - still never got paid!!!""

There appears to be a particular type of low life,( I will not justify the word businessman on these bottom feeders.) who seems to prey on people just starting up in business, or who are struggling financially. They dangle what seems to be a good deal for a job, then when it comes time to pay, they either try to weaselword their way out, or nitpick the work to avoid paying.
 The other type to watch out for, is the guy who pays cash on the barrelhead and indicates money is no problem, until credit is established. Then takes as much work as possible before dissapearing without paying.
B.E.
  

The good engineer does not need to memorize every formula; he just needs to know where he can find them when he needs them.  Old professor

RE: contract and payment question

  All fair comment but dont let possible doubts about being paid after winning in small claims court affect your decision on how to proceed.  A good few years ago I had cause to sue a previous employer in small claims court, won, met major resistance to getting my cash, got dragged back into court on appeal, won again, thought about having the sherriff sieze the company plane but decided not to proceed with that but was having a hell of an amusing time with all of this ( without using a lawyer).

Then I get a formal note from the court that essentially said "Party xyz  has siezed the office furniture of your ex employer in order to enforce a judgement he has against your ex employer.  Ex employer has paid off this judgement. o you wish this siezure to be maintained on your behalf.??   My official response was " Damn Right I do"

I guess its difficult to carry on business with a legal notice affixed to the front door of your business stating " All office furniture within this office has been siezed by the sherriff for non payment of a legal judgement.  Anyone removing this furniture or this notice is in contempt of court"

I got my money about 10 days later.  I had a lot of fun throughout the entire process and learnt an awefull lot that will be usefull the next time I'm owed money

RE: contract and payment question

I do the same sorts of work on occasion for homeowners, except for drainage instead of structures, and I will do the same thing you did- quote them an easy fee and a detailed fee.  I always write all of the different contract alternates into the letter contract, though, so I don't end up in a situation like you're in.  I can always point back at the fee thresholds in the letter.

Charge him what you said you'd charge him and be more clear in your next letter contract.

Hydrology, Drainage Analysis, Flood Studies, and Complex Stormwater Litigation for Atlanta and the South East - http://www.campbellcivil.com

RE: contract and payment question

Oh, the other thing I do with homeowners is I expect to be paid the day of the site visit, or I won't go at all.

Hydrology, Drainage Analysis, Flood Studies, and Complex Stormwater Litigation for Atlanta and the South East - http://www.campbellcivil.com

RE: contract and payment question

We also mainly do grading/drainage plans and will do a lot for free.  But as soon as someone signs a contract we are doing one of two things.  Working without the upfront retainer which most likely we will get paid eventually.

Or we don't start the job before getting money.  As you are new, you will slowly see people out there have a reputation for continuing to have projects without paying properly and because so many people are struggling other little companies will take the work on.

Like I tell everyone, we are not busy enough, but we are busy enough to still turn jobs away right now.

Have you asked the client why they signed the contract if they weren't intending to pay upon the agreed work?

B+W Engineering and Design
Los Angeles Civil and Structural Engineering
http://bwengr.com

RE: contract and payment question

This is resolved, brandon... I doubt Linnea will be talking to this client again anytime soon...

Dan - Owner
http://www.Hi-TecDesigns.com

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