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I subcontract and think there may be a breach of agreement

Discussion in 'Legal' started by security support, Jun 14, 2018 at 1:49 PM.

  1. security support

    security support UKBF Newcomer Free Member

    5 0
    I have been running as a sole trader since 2003. Four years ago I took on a subcontract being outsourced to supply services (myself) via the contractor to the end-client. We did not enter in a formal contract with minimum start/end dates but more a gentleman's agreement. We did document everything on e-mails. I believe this satisfies the five rules of a contract:
    Offers, Acceptance of offers, Intention to agree or work based on the agreement, clear terms of the work and payment amounts.
    One of the terms was that the end-client needed the contractor to use a someone with certain specialised skills and that person was/is referred to as a resource. I have those skills and I am that resource. The documents point out that "A" resource is required and the contractor informed the end-client that by outsourcing to me they now had that singular resource.
    There is not a terrible amount of work involved and not enough to warrant a full-time employee. The rates set for the work (based on per hour and per day) were discounted because I am that singular resource and I am getting all the work.
    I have now been informed that the contractor, not the end-client are thinking of hiring an employee to take some of this work on. I do not complain that they cannot do this; it is their business.
    My issue is, while neither of us is ending the agreement with the other, am I entitled to keep all the work until they do end the agreement? We can both end it with immediate effect. Doing some of the work for a discounted rate is not much use to me. I am only trying to protect my part of the agreement. Would this be considered a breach of our agreement and could I be justified in asking that the rates will be subject to increase once I am no longer the singular resource?
    Posted: Jun 14, 2018 at 1:49 PM By: security support Member since: Jun 14, 2018
  2. KAC

    KAC UKBF Enthusiast Free Member

    846 188
    Posted: Jun 14, 2018 at 2:04 PM By: KAC Member since: May 7, 2017
  3. obscure

    obscure UKBF Ace Free Member

    2,175 483
    Are you sure they are only planning for their employee to take on "some" of the work?

    There isn't enough work for even one full time person but they will take someone on to do a part of that work? Why wouldn't they just get them to do it all and dispense with your services?
    Posted: Jun 14, 2018 at 2:53 PM By: obscure Member since: Jan 18, 2008
  4. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    9,211 1,873
    I think he means his work is not full time on this contract, if so might be best to let it run its course and if there now man does not workout they may well come back to you, or did the contract state a guaranteed number of hours a month in which case its up to what you both agreed about cancelling the contract, but i guess they will just send a email thanking you for your services and a stop date
    Posted: Jun 14, 2018 at 4:26 PM By: Chris Ashdown Member since: Dec 7, 2003
  5. security support

    security support UKBF Newcomer Free Member

    5 0
    It is for minimum 1-2 days per week. The third month of each quarter is incredibly slow and it never reaches this. I don't charge them for 1 day per week minimum and I just let it go. Gesture of goodwill and all that.
    Posted: Jun 14, 2018 at 7:52 PM By: security support Member since: Jun 14, 2018
  6. smallclaimsassistance

    smallclaimsassistance UKBF Enthusiast Full Member - Verified Business

    726 184
    The Pimlico Plumber precedent is a different situation. That concerns employee's rights of a subcontractor, and specifically where a subcontractor works solely for a contractor. The OP is a subcontractor but, although he has not expressly said so, this contract seems to be one of several that he services.

    As far as this situation is concerned, based upon what you are saying, and without looking at the emails, which could change everything, they may not be able to do this.

    If the agreement was that:

    They had a client who required a service;
    They required a resource to meet that service;
    They offered you, the resource, the work;
    You accepted.

    They may not be entitled to just take some of the work in-house (by the way, there are only four elements to a contract: Offer, Acceptance, Intention to create legal relations, Consideration (payment).

    Where this all gets woolly is the absence of a contract, which is always preferable in situations like this.

    It sounds like some bright spark at your contractor's business has decided to try to increase their margin by taking the work in-house, but while I note you have an immediate termination clause, they cannot vary the terms unilaterally.

    That said, if they have given you at least a month's notice before reducing the work, that is probably fair. If they haven't, and have just taken the work, you are probably entitled to at least a month's notice or pay in lieu.

    As I have said above however, all of this depends on what was actually said in the emails.

    Posted: Jun 16, 2018 at 8:36 AM By: smallclaimsassistance Member since: Jan 7, 2015
  7. security support

    security support UKBF Newcomer Free Member

    5 0
    Thanks Dean and you are correct.

    This is one of several contracts I service. The steps you quoted for the agreement are exactly that. After that, included in my documentation is my client informing their client that they had gained the required resource, in me, in order to satisfy them. The end-client being a large finance business then vetted me and made me sign waivers and documentation with them regarding insider trading, security, etc. It is because my client gained me that they gained the work from the end-client.

    I agree about the bright-spark. I believe he is making a name for himself in there.

    They have not given me notice of anything. They just called me in for a meeting, which I assumed was about the Project Management quotation I had just sent them for completely different work. They just started talking about my current arrangement with them and telling me that they plan to bring a trainee in and train him up on the job to do what I currently do. I don't think the end-client will allow this, if they find out. The new person will need an account set up on all the servers which will flag up in the Change Management and probably require the vetting process, waivers, etc.

    The e-mails set out that the work should equate to one or two days per week. Does that entitle me to charge them for one day per week regardless, until they contact me to terminate the agreement?

    As I originally posted, the contract is not worth sharing. I would rather they ended it then if needed, asked for a new one where I could, based on this experience of them, make it nice and juicy. Am I entitled to ask that they state their intentions? Rather than just let them keep stringing me along? I am of the mind to just ignore them until they put something in writing. As far as I am concerned, this arrangement is done and dusted until or unless one of us decides it's not working anymore and notifies the other to end it?
    Posted: Jun 16, 2018 at 12:24 PM By: security support Member since: Jun 14, 2018
  8. The Byre

    The Byre UKBF Ace Free Member

    6,893 2,686
    Dean has outlined (as always!) perfectly the principles involved. He has also outlined the four parts to a contract and the funky one is the 'Intention to Create Legal Relations'.

    The case here is (IMO!!!) weak, as it is not clear that the spoken were not just 'Statements of Comfort'. I'd better explain -

    The 'Intention to Create Legal Relations' means (roughly) the intention to enter into a legally binding and therefore enforceable contract. A offers B an apple for 10p. B accepts. Those are the first two parts of the contract. Offer and Acceptance for the sale of an apple. A gives B the apple. B accepts the apple, but runs away without paying. B has shown 'Intention to Create Legal Relations' by taking the apple (he has also committed theft, but we'll ignore that bit for now!) The consideration (i.e. payment) has not taken place.

    But now along comes C. C tells A that he'll make it good somehow - but fails to do so. That was a statement of comfort and not a contractual obligation.

    Here's a concrete example - Company A borrows money from the bank. The company is owned by two partners and the bank asks for assurance from the junior partner that he or she will remain a partner until the debt is paid. "We have absolutely no intention of selling up and as long as we are part owners of Company A, we shall honour any agreements!" says our brave junior partner.

    Sad-to-say, our junior partner smells trouble ahead, sells up and legs it! The company goes belly-up and does not pay the debt. The bank then goes to the former junior partner and asks for the debt to be paid "as promised."

    In that case (albeit under Australian law - Banque Brussels Lambert SA v Australian National Industries Ltd 1989) the courts found that the statement was merely a statement of comfort and not a contract.

    It was the same as saying "I shall always use your services as a plumber." or "I shall come back next year and ask you to complete the next stage of the project!" These are 'statements of comfort' and not contracts.
    Posted: Jun 16, 2018 at 12:32 PM By: The Byre Member since: Aug 13, 2013
  9. security support

    security support UKBF Newcomer Free Member

    5 0
    I have been invoicing and being paid for the work continuously for the previous four years. Payment has taken place.
    A asked B to do the work. B offered to do so for a fee. A accepted the fee. The work commenced and B invoiced A for the work. A paid B for the work.
    A now wants to change this self-same working agreement.
    Posted: Jun 16, 2018 at 1:30 PM By: security support Member since: Jun 14, 2018
  10. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    9,211 1,873
    Is the end user aware of your pending loss, if so they may negotiate directly with you if the substitute person means they loose a lot of useful knowledge in their system upkeep

    I am not in anyway suggesting you sell yourself to them, but just make them aware you may not be available in future

    I assume your contract for what it's worth does not have anything about if they end the contract you can work for whoever you like

    Also no need for you to accept training the new person if that comes up as nothing in it for you and not what you were hired to do
    Posted: Jun 16, 2018 at 3:18 PM By: Chris Ashdown Member since: Dec 7, 2003
  11. smallclaimsassistance

    smallclaimsassistance UKBF Enthusiast Full Member - Verified Business

    726 184
    Yes, you are. If the agreement is for 1-2 days work a week, or nothing, then I think you should force the issue and remind them of that. The upside for you is that they are clearly intending to give their in-house resource time to bed in, but if you lay your cards on the table and tell them the contract either proceeds at 1-2 days a week, or it ceases, they must face the possibility of their resource becoming overwhelmed before they have found their feet.

    The risk of course is that their employee is already up and running, they call your bluff and the contract ends, but from what you say, either scenario is better for you than the odd job being sent your way when they feel like it.

    If you're going to do this and retain the advantage, you need to act on this before their operative is ready.

    Posted: Jun 16, 2018 at 7:25 PM By: smallclaimsassistance Member since: Jan 7, 2015
  12. security support

    security support UKBF Newcomer Free Member

    5 0
    To my knowledge they haven't yet put this resource in place, so I would really be forcing their hand. Which I feel I should, I have always been reacting to their demands, about time I put the front foot forward instead of defending.

    Posted: Jun 17, 2018 at 12:21 PM By: security support Member since: Jun 14, 2018