Client withholding payment until return of property

[mrpelafio]

Under a General Service Agreement, there are two clear clauses:

1. Upon termination of the contract, either party will receive a 14 day notice period
2. Upon termination of the contract, the contractor will return any company property

No other mention of termination or return of property is stated in the contract (English law).

Now that the relationship has come to an end, the client is stating that they will withhold the due payments (approx. half a month), as well as the notice period payment, until the contractor has returned company property.

The contractor believes that this is illegal withholding of payment, since they are two different legal procedures, and the client has a history of not always paying out their invoices when they don't have to. This creates the suspicion that the client will received their equipment, which is just a laptop and hard drives, and disappear from the picture without paying their invoices, forcing the contractor to go through matters legally.

Is the contractor right in believing that the client has no right to withhold payment and that it is a different procedure entirely from the returning of the client's property?

 

[Gyumri]

The contractor has the right to claim a lien over the property until his invoice is paid. So the best thing if there is zero trust is to arrange the handover at the same time as payment is credited to the contractor's bank account.

The client has a problem with that? Then you know that you would have a problem if the contractor gives back the property without being paid!

Commonsense should prevail to satisfy all concerned and end the issue.

 

[Newchodge]

The contractor has no right to do this, but to enforce your right to payment you would have to go to court anyway.

Gyumri's suggestion of simultaneous hand over sounds good. Or hand over to a third party to distribute at the same time.

Out of interest when did the contract end and when were the invoices/payments due?

 

[mrpelafio]

The contractor has no right to do this, but to enforce your right to payment you would have to go to court anyway.

Gyumri's suggestion of simultaneous hand over sounds good. Or hand over to a third party to distribute at the same time.

Out of interest when did the contract end and when were the invoices/payments due?

You mean the client has no right to do this, right? The contractor would be the one whose payment is being withheld.

The contract ended halfway through the month and the payment due date, as per the contract, is upon the receiving of the invoice, which hasn't yet been sent as the contractor's looking to first discuss matters with the client personally.

 

[Newchodge]

You mean the client has no right to do this, right? The contractor would be the one whose payment is being withheld.

The contract ended halfway through the month and the payment due date, as per the contract, is upon the receiving of the invoice, which hasn't yet been sent as the contractor's looking to first discuss matters with the client personally.

If you haven't issued an invoice they don't owe you anything. That is not a sensible thing to have done! You have no right to payment, currently, but they do have a legal right to recver their property

 

[mrpelafio]

The contractor has the right to claim a lien over the property until his invoice is paid. So the best thing if there is zero trust is to arrange the handover at the same time as payment is credited to the contractor's bank account.

The client has a problem with that? Then you know that you would have a problem if the contractor gives back the property without being paid!

Commonsense should prevail to satisfy all concerned and end the issue.

Figuring out a simultaneous handover (or through a third party) sounds like a decent idea - this will be brought up in the discussion!

 

[Newchodge]

Figuring out a simultaneous handover (or through a third party) sounds like a decent idea - this will be brought up in the discussion!

ISSUE THE BLOODY INVOICE FIRST

 

[mrpelafio]

ISSUE THE BLOODY INVOICE FIRST

Will do today!

 

[Porky]

The mutual handover sounds like best plan, if they don’t want to meet to engage with each other for the transaction (these things can get heated) then the TP idea is good, accountant or solicitors office might help.
I can see both sides in this. Good luck