Advanced search

Mumsnet has not checked the qualifications of anyone posting here. If you have any legal concerns we suggest you consult a solicitor.

Help! Client has cancelled a commissioned project and refusing to pay cancellation charges!

(32 Posts)
BIWI Wed 27-Feb-13 10:37:36

We are a small market research company. A client who was working as a freelance marketing/insight consultant for The Company commissioned us to conduct some market research for them.

We set up the project, agreed how much it was going to cost (all in writing, go ahead given by the client) and went to a briefing meeting with the client and the company's managing director.

We started all the set up work, working over the weekend (and had other people working over the weekend) to meet their timings.

We also have terms and conditions agreed and signed by the client.

However, yesterday The Company pulled the project. We are now, according to the terms and conditions that the client signed, entitled to charge a cancellation fee, of around £9000. We also use another agency who sources our respondents for us, and they will be charging us cancellation fees of around £2800. (This project would have been worth a significant amount of money for us if it had gone ahead)

However, The Company is refusing to pay the cancellation fees, saying that the client had no right to agree/sign our terms and conditions. This despite the fact that The Company's MD met us at their meeting.

As far as I can see, they don't have a legal foot to stand on here - but is this right?

If anyone can help me I would very much appreciate it.

BIWI Mon 04-Mar-13 19:52:05

Well that was our view too grin

cumfy Mon 04-Mar-13 19:40:46

Well done, if they've offered to pay half, they've pretty much accepted liability. Game over.

HecateWhoopass Mon 04-Mar-13 19:15:10

HA! Slapped down.

I bet his face was a picture.

tharsheblows Mon 04-Mar-13 18:53:42

Oh good and bad, I guess. But I'm glad that it's clear cut in the legal sense.

Thanks for the update. Hope getting the money is as painless as it can be.

I'm always amazed when people think I'll just roll over and give in. I do come across as a bit dippy, I know, but why would that mean that I'll let people walk all over me? Boggles the mind.

BIWI Mon 04-Mar-13 18:14:27


My first job was as a secretary in an advertising agency. I had to draft something one day, which one of the account executives took great exception to. He came back with it, telling me that one particular sentence didn't make sense. I read it again, handed it back, telling him that it did. He said it didn't. This went on for a bit.

Then he came out with the great line "look, I've got an A-level in English, and I'm telling you it doesn't make sense". To which I was able to reply "well, I have a degree in English, and I can tell you that it does!"


Very satisfying.

HecateWhoopass Mon 04-Mar-13 17:46:16

Oh yes. I bet we could swap many stories!

Far too many of mine being people assuming that I must be the receptionist. hmm

Eg arseholes coming in for interview, talking down to me and then being told who I am. grin
Loved it!

BIWI Mon 04-Mar-13 17:39:56

Oh yes. I think, also, because we are women there was a certain expectation that we would just go away!

Hah. Little did they know ...


HecateWhoopass Mon 04-Mar-13 17:38:12

Ah. Crap, isn't it? Particularly the way they make you the bad guy. That always made me cross.

I hope they cough up.

BIWI Mon 04-Mar-13 17:27:21

This company does very little market research, so we're not concerned about losing any potential future revenue. And, given the way they have dealt with this situation so far, we wouldn't want to work with them anyway!

Our only concern is the client who brought us in initially - we have worked them before, and we would like to do so again - but it's an important principle we're standing for here. And also our income. We haven't got any other income at the moment, so can't really afford not to fight this to the bitter end.

PureQuintessence Mon 04-Mar-13 17:25:06

Great News Biwi, piuh!

HecateWhoopass Mon 04-Mar-13 17:20:08

I've been in a similar sort of situation, years ago. Vaguely similar. grin

I ran a care agency and it was in our T&Cs that if homes offered a member of our staff a job, they had to compensate us. (it was more complicated than that, it had to be a direct offer as a result of them being sent by us, not someone applying for an advertised job. Rest assured it was a fair and legal condition at the time)

Well, they did. Over and over again. And although it was in the T&C that they had to pay a fee, if we pushed it - they'd simply never use us again. And we had more to lose by losing the company's other business than by letting them get away with yet another member of our staff.

I guess my point is - if you get this money, do you lose this company and/or client? Is that going to be a problem for your organisation?

I'm not saying you shouldn't go after what you're owed. It's just a dilemma we faced often.

BIWI Mon 04-Mar-13 17:08:01

Well, we took legal advice and apparently we have a clear case - The Company doesn't have a leg to stand on.

We have spoken to one of the directors who complained that we were taking a very aggressive stance hmm. No, we want what is legally ours!

We have submitted an invoice for the full amount we are due (they offered to pay half which we refused) and we are now waiting for payment within 30 days, according to our terms and conditions.

Which won't happen, I imagine, so then the lawyer gets involved. They get another invoice which they have 7 days to pay, and I think a court order of some kind happens then. <vague>

The Client was definitely acting as a representative of The Company - that is his role/remit, to commission this kind of work.

So we should get our cancellation fee as compensation - but it's obviously going to take a bit of time.

Hope it doesn't happen to you, tharsheblows. But if you're worried at all, make sure that you have everything in writing re commission go-ahead and that you have your terms and conditions signed by your client.

tharsheblows Mon 04-Mar-13 16:15:34

BIWI, what ended up happening? I'm curious because I can see myself getting in the same situation.

Kiriwawa Thu 28-Feb-13 20:20:26

If the contractor is authorised to commission MR on behalf of the Company and has done so before, then the Company hasn't got a leg to stand on I'd think. They must have authorised them to sign on other contracts that have progressed (with you?) or the Contractor no way would have put themselves in this position. So surely there's precedent? I don't know how that works in law.

I'm a contractor and working pretty much full time for a massive organisation at the moment. I hired someone on the company's behalf to do some consultancy work for the firm recently. While we didn't sign a contract, if we'd cancelled on the day or at the last minute, I'd fully expect the company to be liable for any cancellation charges because I had hired the consultant at the company's behest. I am in effect acting as an agent of the company - I have a corporate laptop, email address, phone number etc - to all intents and purposes as far as outside organisations are concerned, I am an employee.

The client in your case needs to get pissy with The Company I think.

cumfy Thu 28-Feb-13 15:43:41

Yes, but from what I've read the contract was not signed in front of the MD, in which case it obviously would be clear-cut.

fedupwithdeployment Thu 28-Feb-13 15:02:16

From what I have read, it would seem that the Client had ostensible authority to sign, and as such the Company would be bound. This will apply whatever the internal procedures say.

If you are contracting with a big company, and someone who appears to be the cleaner signs the company - you could not rely on the signature.

If you are contracting with a company, and a senior contractor with whom you have met. alongside CEO signs a contract, it is reasonable to rely on that signature.

PureQuintessence Thu 28-Feb-13 10:10:21

He may not have been an authorized signatory of The Company, though. All employees, and contractors may act on behalf of a company, but might not be authorized to sign anything, like contracts or T&C on their employers behalf. I think your problem may be with The Client, not The Company if that is the case.

Even if our employees commission work through our subcontractors, or purchase services, I will have to sign the contracts or T&C's. They cant do that, and they know it.

(Disclaimer: Not a legal bod)

BIWI Thu 28-Feb-13 08:05:36

Why would that be though, when he was the representative of the company? His role for The Company is to commission market research. All correspondence from him came from the company's e-mail address.

And the signed terms and conditions had his name and signature on it, but it was clear that the commissioning client was The Company.

cumfy Thu 28-Feb-13 00:00:02

I think you may have a problem.

It seems that you may have to sue the consultant personally.

They may well just dissolve their business and leave you grasping at thin air.

Good luck though.

BIWI Wed 27-Feb-13 23:25:04

Well, in our terms and conditions, which has been signed by the client, it says:

Commissioning Client: Name of The Company

Signed by: Signature of the client

We haven't screwed up, thankfully!

cumfy Wed 27-Feb-13 22:49:34

I would read your contract very carefully; who precisely is the contract with ?

But, basically, unless you've screwed up, go ahead and sue them both.

Probably easiest in small claims even if you don't get 9k.

BIWI Wed 27-Feb-13 19:09:18

Well we have taken some legal advice, and we have "a valid and enforceable claim for the cancellation fee". So hurrah!

Thank you everyone here for your help and support.

Watch this space ...

PureQuintessence Wed 27-Feb-13 13:17:07

By running faster I did not mean running away, but being one step ahead of The Company.

BIWI Wed 27-Feb-13 13:12:52

Not sure about running faster than his employer - as the fee had to be agreed internally (as it was higher than the initial budget), and the MD attended our meeting, so obviously aware of what was being commissioned.

But yes, we will be taking legal advice. Just waiting for a response from The Company first, stating

a) that they are refusing to pay
b) what their grounds for refusal are

Then we can decide the best next course of action

PureQuintessence Wed 27-Feb-13 12:44:38

Is this a case of your Client running faster than his employer?

I fear The Company is right, if the freelance client had no authority to sign on behalf of the company, this could render the contract invalid. Ie the Company has not signed the contract, the client has. I would see a solicitor about this.

Join the discussion

Join the discussion

Registering is free, easy, and means you can join in the discussion, get discounts, win prizes and lots more.

Register now