Letter: Full refund demanded due to contract termination? Help!

[FullyCreative]

Hi all,

I am needing some help in how to word a strongly worded letter for a client who I have done/doing website work for.
They paid the job upfront £2,600.
I have been working on the project, with the client being very happy with the progress and no complaints had regular meetings and phone calls.

All of a sudden, a 3rd party developer has gotten involved discrediting all the hard work I have done, which the client has listened too. Now the client is wanting a FULL refund of all the money paid by Friday of £2,600 with no content or £2,000 with them taking the content.
I feel sick at this fact!

They are accusing of not meeting the descriptions in the proposal, that the contract should be void.
Can they do this? When they have not communicated at any stage?

The client did sign a contract.
With the terms and conditions stating termination settlement fees.

With the client being very unreasonable, and not wanting to talk to me about this matter it is becoming rather difficult.

Can I word a letter which states the hours put into the project and costs which I will have incurred to be taken into the settlement fee?

Does anyone have a strongly worded template?

I worry about doing this and I feel I should give all-in at £2,600 back, as this client is 4 doors down from us, and I don't want any negativity from them as I feel we certainly will be met with a grudge from them, but at the same time, I want to stand and fight for what I have done and not be a push-over!

Really hope someone can help me word this?!


Thanks,

 

[Nico Albrecht]

3rd party developer has gotten involved discrediting all the hard work I have done,

Is there a possibility the other 3rd party is right and your work is not up to scratch? Hard work doesn't mean it is good work after all. Do you have a feeling you have a hard time defending your work based on best practise or industry standards?

 

[Newchodge]

Do NOT spell out every second you have spent and every thing you have done.

Tell them that you are both surprised and concerned by their letter/email/phone call and ask that they specify what is wrong, when they noticed it and why they did not immediately raise their concerns.

If they have any valid concerns propose a discussion to sort it out. If they don't, or won't discuss it, just say no and stick to your TCS and the signed contract.

 

[FullyCreative]

Is there a possibility the other 3rd party is right and your work is not up to scratch? Hard work doesn't mean it is good work after all. Do you have a feeling you have a hard time defending your work based on best practise or industry standards?

Hi Nico Albrecht,

I believe my work to be good, and as not one point has it gone against the wording of the proposal. The difficult one, is the design of the website has been rather straight-forward, its the setup time and product input which has taken most of the costing up.

Again, I would be willing to settle with an agreement, just not have someone 'think' they know better as they have stated in this letter we received of "This opinion is based on many years of IT experience and is unbiased" this was from the 3rd party.

I feel I could defend for the time and works conducted in this project without question, profit and the portion of the website project still to be completed, and I can walk away from.

Do NOT spell out every second you have spent and every thing you have done.

Tell them that you are both surprised and concerned by their letter/email/phone call and ask that they specify what is wrong, when they noticed it and why they did not immediately raise their concerns.

If they have any valid concerns propose a discussion to sort it out. If they don't, or won't discuss it, just say no and stick to your TCS and the signed contract.

Hello Newchodge,

Ok, understood about not spelling things out.

I have received a letter written by this 3rd party person on behalf of the client going through the contract (which isn't between them its with the client) where they have nit-picked to find differences and fault in what has been delivered and what it states. I have responded to each point back to the client with clear explanations of their attempted fault finding.

There have been teething problems, but all throughout the project the client has been aware and at not one point have the raised any concerns with me.

I'm happy to discuss, they told me to get out of their shop when I tried.
I'm willing to co-operate in an agreed settlement, hence I thought about providing a cheque of an amount with a letter informing them of the settlement fees.


Thank you!

 

[GLAbusiness]

I agree with Newchodge. Do you have an agreed requirements document as part of the contract they signed? If so, ask them to specify the way in which the delivered product differs from the requirements document. If they can identify defects you should put them right. If you have delivered what they asked for then they should pay you.

If the 3rp party developer is simply saying "I would not have done it like that" then it carries no contractual implication. The only question is have you delivered a product which meets the original requirments

 

[bodgitt&scarperLTD]

I'd say you're in a strong position. You have the money. They have not raised any concerns thus far. I would refuse a refund and let them take it to court if they wish.

If you feel that you could easily defend the quality of the work, then the best place would be in front of an independant arbritator, whether that be mediation or the judge.

 

[FullyCreative]

I agree with Newchodge. Do you have an agreed requirements document as part of the contract they signed? If so, ask them to specify the way in which the delivered product differs from the requirements document. If they can identify defects you should put them right. If you have delivered what they asked for then they should pay you.

If the 3rp party developer is simply saying "I would not have done it like that" then it carries no contractual implication. The only question is have you delivered a product which meets the original requirments

Hi GLAbusiness,

Yes, I have a proposal which they have name printed, and dated along with tick against the payments they went with (full payment)

However, the Client un-known to me until recently as someone did this for me, decided to sign-off the contract with the word "C&&T" which I found highly offensive upon discovering!!!!

The 3rd party has gone through the contract and attempted to find differences and stating that I have done this, when the contract 'implies' this is what they have attempted to do.

I can happily defend the proposal, time and the charges I have already provided, and settle with an agreement of the works not done, so I am paid up to that point.

I'd say you're in a strong position. You have the money. They have not raised any concerns thus far. I would refuse a refund and let them take it to court if they wish.

If you feel that you could easily defend the quality of the work, then the best place would be in front of an independant arbritator, whether that be mediation or the judge.

Hi Bodgitt&ScarperLtd,

The project has been on-going for about 3 months.
They have been happy throughout and not given me anything in writing nor have I added into any notes made of any problems, differences to proposal or issues.

I'm happy to pay for outstanding works and they take the settlement figure so I am paid works/service done (up to a point, I would like to be fair).

I just don't fancy going through the hassle of judges/courts - they scare me!

Thanks!

 

[billybob99]

they scare me!

It shouldn't. The lady at the Asda pizza counter is way more scary.

It depends why this other 3rd party got involved in the first place. Did the client have doubts with the work and instructed them to take a look?

Has this 3rd party just given their opinion that the work you've done is a rip off and you really should have charged £500 (not uncommon in software dev) and now the client agrees.

The chances of them seeing this out the other end is pretty slim right about now.

Time for you to down tools and find out what the real problem is.

However, the Client un-known to me until recently as someone did this for me, decided to sign-off the contract with the word "C&&T"

What kind of serious client does this? You really need to take control of the contract stage.

 

[Newchodge]

However, the Client un-known to me until recently as someone did this for me, decided to sign-off the contract with the word "C&&T" which I found highly offensive upon discovering!!!!

Apart from being puerile and offensive, it does not matter. The client made their mark on the document.

 

[billybob99]

Apart from being puerile and offensive, it does not matter. The client made their mark on the document.

Does that mean the OP can refer to the client as Mr. C&&T?

 

[Newchodge]

Does that mean the OP can refer to the client as Mr. C&&T?

I think he should.

More seriously, if the client does go to court, which is very unlikely, the judge is likely to find this as evidence about the client's attitude to the contract - ie that he wants to be able to ignore it. That won't go down well!

 

[Alison Moore]

It sounds like the client hasn't been happy with the work, but rather than addressing the issue with you, they've brought in a 3rd party to evaluate your work, and now your client won't discuss it with you. I'd say that they're unlikely to get very far if they take legal proceedings (and very few people do) as a) they've never actually told you that they're unhappy and given you an opportunity to correct b) it's for a relatively small amount of money and there's no guarantee that they would win. I'd hold your ground, and ask them to put into writing exactly what they deem hasn't met the contract. Software contracts are notoriously tricky as clients often can't describe what they want, and what they have in their mind is often vastly different to what you deliver.

 

[Alison Moore]

However, the Client un-known to me until recently as someone did this for me, decided to sign-off the contract with the word "C&&T" which I found highly offensive upon discovering!!!!

Just to clarify, when your client originally signed the contract, they signed off with C&&T? In that case, they had no intention of working with you and honouring the contract. I'd love to see them go to court and explain that one!

 

[billybob99]

Just to clarify, when your client originally signed the contract, they signed off with C&&T? In that case, they had no intention of working with you and honouring the contract. I'd love to see them go to court and explain that one!

Would have assumed the same, but they did drop him £2.6k upfront - unless the plan was to use it as a carrot, get the work done and then try to get it all back.

 

[tony84]

My understanding is that they can not just decide they are unhappy.

They have to give you the opportunity to put it right.

As others have said, if you have done the work. Do not back down, hold firm. IF you receive court papers, then decide if you want to negotiate but as it stands, I would try to appear to be the reasonable one "I am sorry you are unhappy and I am happy to look at your concerns, please could you list them or could we arrange a time for a call where we can discuss them and see if we can work through them"

People will demand things, it does not mean they will win. If you are prepared to give the money back, you have absolutely nothing to lose by holding out.

 

[Financial-Modeller]

Whose contract was it? Yours or theirs?

 

[FullyCreative]

Whose contract was it? Yours or theirs?

Hi Financial Modeller,

It was my proposal contract they signed.


Thank you to everyone who has helped in replying so far!
I feel I am going to stand ground on this and offer a 40% settlement payment as part of our terms and conditions in the contract for termination.

Thanks,

 

[Financial-Modeller]

You proposed a contract where they paid in advance for development work, and included a provision that the client receives a refund of 40% if they terminate the contract?

 

[FullyCreative]

You proposed a contract where they paid in advance for development work, and included a provision that the client receives a refund of 40% if they terminate the contract?

It was their option for payment to pay in full.
I did not propose that they should.

In the contract is stated a minimum settlement of 30% would be applied.

As part of the settlement to the termination, I am prepared to set 60% for works I have completed and costs incurred to me, with a settlement of 40% to the Client.


Thanks,

 

[GLAbusiness]

I would not be so keen to let them off the hook so easily. Do they have reasonable grounds for terminating the contract without giving you the chance to correct any errors in the product. If they have paid up front in full then keep the money and let them sue (if they have the ba&&s)

 

[FullyCreative]

I would not be so keen to let them off the hook so easily. Do they have reasonable grounds for terminating the contract without giving you the chance to correct any errors in the product. If they have paid up front in full then keep the money and let them sue (if they have the ba&&s)

Hi GLABusiness,

We do not believe they have reasonable grounds at all.
They are not willing to give any chance to correct any errors, they demand payment by this Friday of the full amount, or £600 less and they take the website as well.

I like to believe we are fair, the costs were higher due to precautionary expected costs, so I am certainly willing to be fair and take that off the price as I would have done with the client anyways, along with some issues still to be addressed that we were working on which I will not charge for.


Thanks,

 

[tony84]

Why would you offer money back if you think you are in the right?

If you go and offer 40% back straight away, they will push for more. Whats the phrase, give them an inch...

 

[nelioneil]

Hi GLABusiness,

We do not believe they have reasonable grounds at all.
They are not willing to give any chance to correct any errors, they demand payment by this Friday of the full amount, or £600 less and they take the website as well.

I like to believe we are fair, the costs were higher due to precautionary expected costs, so I am certainly willing to be fair and take that off the price as I would have done with the client anyways, along with some issues still to be addressed that we were working on which I will not charge for.


Thanks,

You have a signed proposal detailing the details of the website and the client has not specified previously any fault during those 3 months.

I would not even try to consider a compromise - the client is in a very weak position. A judge will also not look at them favourable judging how they signed the proposal!

Were the cost increases discussed and agreed with the client?

 

[FullyCreative]

You have a signed proposal detailing the details of the website and the client has not specified previously any fault during those 3 months.

I would not even try to consider a compromise - the client is in a very weak position. A judge will also not look at them favourable judging how they signed the proposal!

Were the cost increases discussed and agreed with the client?

Hello Nelioneil,

Yes, I do agree with you in that.
However, with the client only a few doors down I don't want to find my tires slashed or my shop windows put through!

Yes, the costs of the proposal were discussed and detailed to the client, along with a price edit as well!


Thanks,

 

[Newchodge]

If you offer them anything they will take it either as a sign of your weakness or as a sign of the strength of their position. They will demand more.

 

[Financial-Modeller]

This is a little unclear.

...We do not believe they have reasonable grounds at all...

Which sounds like you have provided everything that you agreed to do, per the original proposal. but in the next sentence you say:

...They are not willing to give any chance to correct any errors...

Which suggests that you haven't, reinforced when you later say:

...along with some issues still to be addressed that we were working on which I will not charge for...

You haven't explained the reason for the sudden change in attitude, or whether time was a factor or similar reason e.g. the client expected the website to be live weeks ago and it isn't yet. However, with limited info provided, if I were you, I would:

1. Correct the valid errors that they have identified.
2. Ensure that everything is done per the original proposal.
3. Complete the outstanding issues where they were part of the original proposal.

Anything else that they have requested is outwith the original proposal, so list these change requests as a new proposal, and make your charge for this additional work clear.

Whether they choose to engage you to do this extra work, or pass it to the other developer, and whether you choose to discount it given the state of the relationship is something for you to negotiate, but as other's have said, I see no reason for you to return your fee.

 

[Spur Support Services]

I am not a lawyer, and strictly you should may wish to seek contract law advice from a suitably qualified professional. Perhaps see if your commercial insurance includes any legal protection insurance coverage. This may give you access to legal advice.

From my tax/commercial experience, one of the points about being a contractor rather than an employee is that you can choose the way that you work towards fulfilling the end requirements of the contract.

Points of care may be around the original scope. Did the original scope include or omit key legal compliance areas? If the client didn't include them in scope, then they wouldn't be in your price, so your contract still stands.

If this 3rd party (who has a vested interested in taking the work off you), then has a different way of fulfilling the contract or have pointed out that the contract scope was incorrect, then their view feels largely irrelevant to your original agreed work.

If the person who contracted you hasn't given you the chance to complete your agreed scope, then you are still in the right. Have you spoken with them to ask them if the original scope requires extension and whether they want you to quote for the extra work?

I would resist giving any refund and instead give the true client a timeline of your expected completion of your original contractual commitment to them.
Unless there are termination or break clauses in your contract, then I am wondering on what grounds the client can breach the contract by not letting you complete the work.

But as I said, I am not a lawyer, just an accountant with a lot of commercial experience. The above are just possible areas that you could consider. Have a look at your insurance cover and contact your legal protection insurers if you have it.

 

[Frank the Insurance guy]

Perhaps see if your commercial insurance includes any legal protection insurance coverage. This may give you access to legal advice.

If you have Professional Indemnity Insurance - that policy will definitely help. It should pay for any legal and defence costs in responding to allegations for failures in your service (Note - there may be an excess for this, but many policies do not apply an excess to defence costs - they only if you are found to be at fault and the insurer pays damages).

However, from your posts (eg. wanting to get it sorted and they are only a few doors away) it looks like this may be a case of you making a "commercial decision" - ie. one where you do not admit being wrong and make an offer. I would suggest you mark any such offer "Without prejudice and in full and final settlement".

Perhaps go in with a lower offer as others have suggested with a view to moving to your reasonable one later?

A couple of points also:
1. When allegations are made by someone other than the contracted party (the customer), you do not have to respond, unless they have a letter of appointment/authority. Out of courtesy you may wish to reply to let them know that you will not be responded to their letter/email etc as you have no contract in place with them.
2. When allegations are made, it is sometimes worth avoiding responding to each allegation or point. Some clever firms send of a list of things hoping to get more information back that they can then pick up. If the allegations are all wrong, the onus is on them to prove it, so a simple response saying that you deny every allegation is suitable - they then have no further information and will need to dig for it themselves in trying to prove what they say!

 

[FullyCreative]

Hello all,

Just a little update on how this is going.
We submitted a settlement letter with a non-negotiable settlement and final closure of contract due to the client wanting to terminate early.

They have responded back with still wanting the full amount stating that we 'went live' with the website and broke the terms of the contract for it to still be treated as void.

I feel the client is just trying to worn their way out of it by saying the contract is void. We hadn't even signed off any completion paperwork for this project, as the website was still being tested upon.

We feel we are in the right still by:

• Contract signed
• Evidence of communication (with no complaints)
• Website showed a summary of works with works outstanding
• No availability to discuss with Client
• No available to remedy any wrongs
• Provided explanation to any allegations
• Tried to make a fair settlement offer

We are going to approach our legal insurance to see what the next steps are.

 

[Newchodge]

We are going to approach our legal insurance to see what the next steps are.

You really should have done that before making any kind of offer.

 

[FullyCreative]

You really should have done that before making any kind of offer.

Hi Newchodge,

I agree. Instead we went on gut feeling of trying to resolve amicably ourselves.

Thanks,

 

[forevergroup]

It sounds like your T&Cs need urgent revision. If you have a clause that specifically facilitates clients to opt-in to breaching their contract with you at a reduced pay level you're asking for trouble.

This situation is exactly what professional indemnity cover is for. Do you have it?

Firstly, you need to completely ignore that there a third party involved. You have no contract with them and no obligation to deal with them. For the customer to apparently appoint them to bully you is spiteful and infantile.

I'm struggling to see the basis for requesting the funds back unless there is a really stark difference between what has been requested/promised and what has been delivered.

 

[Frank the Insurance guy]

This situation is exactly what professional indemnity cover is for. Do you have it?

Yep - Professional Indemnity Insurance is usually triggered at the point any allegations are made which have resulted in your customer being out of pocket. This can include the refusal to pay your fee because of the allegations.

I have been involved in claims where insurers have worked with the business to defend the allegations made. The onus is on the other party to prove you are at fault, not for you to prove you are not!

 

[FullyCreative]

Hello UKBF,

Just an update ...... its still on-going!
We have support from our Insurance and Legal Teams who will represent us should it go any further to Courts. We have also got a full evidence pack of all correspondence should it be called upon.

Recently this week we have received another threat from them seeking demands of payments within 7 days (or else!) worded email. However, as with the countless times before if it not following the ruling of the Courts and raised through a Letter of Claim it is the last time will be responding to such threats.

Pleased to say at the support of the Legal aid we have received it has been an insightful experience, albeit stressful at times. Even the Solicitor has said they have never come across such a silly thing to go to these lengths over, especially from how they behaved at the beginning.

Things are meant to test us and this has certainly been one of them, me personally I feel I have grown stronger in terms of not letting things get to me as much and knowing that sometimes I am right and should back my judgement.

However, really happy that our procedures, contractors and work-ethic remain strong knowing we are in the right and performing excellent service to our clients.


All the best to everyone in 2021, and again will let you know how this goes!

Thanks,

 

[Awinner2]

Let your legal team deal with it on your behalf. Do not engage with or make any more offers directly to your client. And, if you have control over the website, change the status to "Work in Progress" so that nothing is visible to any visitors, including your client and their alleged 3rd party.

 

[Marbman]

Has there been a conclusion to this contract issue FullyCreative?

 

[computerbeing]

Unreasonable claims by clients are commonplace across businesses from all sectors. You do not need any strong worded letter. Just an email stating the facts ( we delivered as per our contract - this is what we will do according to its terms). If they wish to make a claim against you (although doubtful) think of it as a learning experience. If you worry about them bad mouthing you and that is why you are tempted to cave in to their demands, think that they will bad mouth you whether you give them the money or not. Stand your ground. Learning curve ahead.

 

[FullyCreative]

Hi UKBF,

As a closing post to this thread, I thought it would be good to come back and give an update!
We stood our ground - no action was taken against us.
No need for courts, just with the use of our Insurance Team was everything quashed.

Lessons to be learned on this for others going through similar times.
If you know you are right and can back yourself, then back yourself.
People like to prey on your weakness to take advantage.

To everyone who has posted support to us on this matter, I'd just like to say thanks.

Stay safe,

 

[WaveJumper]

Good result nice to get an update

 

[Frank the Insurance guy]

No need for courts, just with the use of our Insurance Team

Great result @FullyCreative

Serves as a reminder for business that have insurance cover in place - insurers will stand in your corner and help, so use them!