Unpaid invoices - withholding customer assets

Discussion in 'General Business Forum' started by Change18, Feb 9, 2018.

  1. Change18

    Change18 UKBF Newcomer Free Member

    12 0
    I'm wondering if anyone knows the law and procedure around the following scenario.

    It's a similar scenario to storage companies, who take possession of their customers items if they do not pay. They auction them off to recoup the losses.

    I'm unsure of the legal process of this. For example, whether it's an automatic right of the company or does it depend on the contract they asked to the customer to sign.

    In my scenario I'm a web developer, who offers hosting for customer websites. If a customer doesn't pay their hosting bill for several months and then I proceed to give a final notice of hosting closure, how should I handle the website?

    Do I have the right to withhold the website until the invoice is settled. And if it isn't, do I have the right not to pass the website package (all files, databases, etc) back to the customer? Do I have the right to sell any valuable parts of the website (stripped of company identify and customer data, etc) to recoup costs?
     
    Posted: Feb 9, 2018 By: Change18 Member since: Jan 10, 2018
    #1
  2. MBE2017

    MBE2017 UKBF Regular Free Member

    343 66
    IMO you cannot hold their website legally, you would need to take court action to recover monies owed to yourself to stay on the right side of the law.
     
    Posted: Feb 9, 2018 By: MBE2017 Member since: Feb 16, 2017
    #2
  3. Mitch3473

    Mitch3473 UKBF Regular Free Member

    947 214
    We've done a few times with laundry. It certainly sharpens late payers senses when you've got all their linen and they've got guests. I'm not too sure nor too bothered about the legalities but it works......
     
    Posted: Feb 9, 2018 By: Mitch3473 Member since: Aug 25, 2011
    #3
  4. Change18

    Change18 UKBF Newcomer Free Member

    12 0
    Hi Mitch,

    Yes being able to suspend hosting so the website goes down and so does email does sharpen up late payers. Suddenly it's priority for them and they miraculously pay immediately. Even though it wasn't a priority to pay or reply to emails for weeks :).

    Thanks MBE. I was specifically interested if anyone had any experience of this from a legal point of view. Considering there are companies who do it legally, such as storage companies, I know it's possible. I was interested if there is an common legal process or if it was dependant on contracts and things like this. For example, customers would be technically securing their asset against the storage unit and in my case the hosting.

    If this was to ever happen to me, it would be just a few months hosting. I'd never start court action as the value is too low. I'm just interested in the legalities of withholding assets to encourage invoices to be paid. Even though I agree with Mitch has said, it's an easy and very effective method.
     
    Posted: Feb 9, 2018 By: Change18 Member since: Jan 10, 2018
    #4
  5. Mitch3473

    Mitch3473 UKBF Regular Free Member

    947 214
    I'd never start court action as the value is too low...
    Therein lies the answer
     
    Posted: Feb 9, 2018 By: Mitch3473 Member since: Aug 25, 2011
    #5
  6. Change18

    Change18 UKBF Newcomer Free Member

    12 0
    Not the answer to my original question :). If companies had the right to withhold assets to recoup costs, there would be no need for court action necessarily.

    For example, a storage company can lock the unit so a customer has no access to their possessions until payments are made up to date. Therefore they are withholding assets. They are also then allowed to sell those assets to recoup their losses if payment is still not made.
     
    Posted: Feb 9, 2018 By: Change18 Member since: Jan 10, 2018
    #6
  7. obscure

    obscure UKBF Ace Free Member

    2,297 513
    You can do what is written in the contract. Most storage companies have clauses that state what will happen in the event of non-payment.
     
    Posted: Feb 10, 2018 By: obscure Member since: Jan 18, 2008
    #7
  8. Mr D

    Mr D UKBF Legend Free Member

    8,276 846
    Presuming of course that the storage container has assets. Junk maybe, even rubbish.
     
    Posted: Feb 10, 2018 By: Mr D Member since: Feb 12, 2017
    #8
  9. Paul Carmen

    Paul Carmen UKBF Regular Full Member - Verified Business

    227 49
    You can stop the service, that's all unless you specifically state anything else in the contract. Even then that would have to be enforceable in English law.

    Companies that do this either have a clause that covers them legally, have taken legal action first, or already are a secured creditor in the case of administrations etc.

    If you switch off their hosting that is fine. If they own the website but then have no access to it, you could charge them to switch the site back on & carry out any work to give it to them, if you no longer wanted to host them.

    If you tried to sell it & they own it, you open yourself up to legal action from them.
     
    Posted: Feb 10, 2018 By: Paul Carmen Member since: Jan 27, 2018
    #9