Client Terminated a Contract Without Providing Proper Notice
My question involves business law in the state of: OHIO/TENNESSEE
I do video production out of my home in Ohio. I've had a contract with a church in Tennessee to provide monthly episodes of a program they send me which I edit and return to them. The contract states they have to offer me X amount of work each month guaranteed in exchange for discounted rates. We've had this agreement going on five years now.
The contract length is a period of two years at a time and it clearly states they must give me 90 days notice if they intend not to renew each time (so I can make other arrangements to replace this income without having it jerked out from under me at the last minute). The contract came up for renewal this past January, at which time they did not inform me they wished to not re-up for another two-year period (quite the opposite in fact, as they seemed very enthusiastic about the future).
However, this past May (after my monthly paycheck did not arrive) they called to state they were dropping me and would not be paying me anymore. When I explained we still had a binding contract that had already auto renewed (they usually sign a new paper contract after each one expires, however this time they did not) they told me to just take them to court. They supposedly spoke with their lawyer and believe they are not legally bound to our agreement any longer since they didn't sign anything again this last round. To cover me end, I've continued sending them edited videos since then without pay to ensure I'm holding up my end of the contract and can't be seen as being in breach either.
I have two questions. First, are they right? I thought I had covered against this kind of thing in the verbiage about giving me notice. I'm not sure if I legally can sue them for the remaining balance (which the contract outlines will fall due if the terms are ever breached). Second, since I'm in Ohio and they are in Tennessee, where should my lawyer be located? Should I hire someone up here or down there (as I'm not sure which court system would handle it).
Any guidance would be much appreciated. Thanks!
Re: Client Terminated a Contract Without Providing Proper Notice
Without reading the contract I can only give you general information based on lots of speculation so don't take any of my comments as gospel.
If your contract has an automatic renewal provision then it has already automatically renewed. But if it requires something to be signed then it hasn't.
As an aggrieved party to a breach of contract you will be obligated to mitigate your monetary losses by replacing your client with another client as soon as reasonably possibly. If you don't, you won't be able to win on claiming the full two years. If, because of market factors, it's impossible to replace your client you will have to prove it in court (not just say it). If you can prove diligent efforts you will have to wait to sue until the two years are up or until you give up. When you give up you will only be entitled to the number of months until you gave up.
Then there's the question of how much the client owes you. Obviously he owes you for the last job for which you haven't been paid but how do you figure out how much a month you would have actually been paid would seem disputable to me.
I'll bet that your contract is poorly written. Because of the uncertainty of future earnings it should have had a liquidated damages clause (google it).
There are probably other things in it that would be impractical or impossible to enforce because of ambiguity.
Worse, you will have to sue him in Tennessee where he is located and you don't ever get awarded travel cost or lost earnings due to going to court. You also don't get your lawyer fees unless your contract has a bilateral lawyer fee provision.
Bottom line, yes, you can sue.
For the future I suggest you hire an attorney to rewrite your contract to address all the things that are wrong with it.
Post the entire contract word for word for additional comments.
Re: Client Terminated a Contract Without Providing Proper Notice
Nobody here can interpret your contract for you, as nobody here has seen it. If you want your contract's renewal terms explained to you, you will need to actually show the contract to a lawyer.
When you consult your lawyer, consider also asking him about any choice of law and venue clauses that exist in the contract, as they may allow or require litigation in a specific venue. You can also ask about the likely cost of litigation, as that is something you will need to weigh against the amount you are likely to recover.
Re: Client Terminated a Contract Without Providing Proper Notice
Hello all. Sorry it's been a while since I've been able to follow up with a reply, but life kinda' got in the way for the last little while. But now I'm back and ready to revisit this. I copied the part of the contract that specifically deals with them being required to give me proper notice (which they've agreed to and signed off on for the last several years). It's in the section that deals with both early-termination and renewal:
Quote:
Section 1.02 - EARLY TERMINATION AND RENEWAL:
I. Failure to comply with the terms of the agreement, such as early termination by the Client, will result in the remaining balance of the agreement falling due.
II. Intent not to renew agreement beyond the initial TWENTY FOUR MONTH (24 Month) term must be communicated NINETY DAYS (90 Days) prior to the last day of the term, June 1st 2016.
Also, I want to be clear about one thing in regards to my motivations and why I'm pursing this. I heard someone else mention I don't have much of a case, because I can't prove not giving me notice harmed my business in any way or prevented me from replacing that income.
This is not my gripe. I agreed to provide video production services over the course of the term for a significantly reduced rate in exchanged for guaranteed work (hence the 24 month term). These are rates they would have never gotten from me other wise, had they not agreed to certain terms. One of those terms was them not dropping me at the end of the contract without notice, so I could then have enough time to put things in place and plan ahead (which is why I gave them the 90 day window). However, they ignored this agreement which is in black and white (a term that isn't new and that they've know about for years) and just jerked the rug out from under me. So this isn't as much to do with future clients as it is I feel I gave away services at a reduced rate over the course of the contract in exchange for a proper 90 day wind down period that I never received.
So looking at it from that stand point, am I in the right in feeling that I was cheated out of a reduced rate and they didn't uphold their end of the bargain by not giving me the notice I required?