Client Retained Service Provider for a Block of Hours, Refuses to Pay for Unused Time

[reliabilityguy]

My question involves business law in the state of: MI and/or OH

Here is the situation...

Company A engages Company B (an Ohio company) for 32 hours of consulting work in one month. Company B engages Company C (a Michigan company) to provide the 32 hours of consulting work to A.

I do not know the details of the agreement between A and B (i.e., verbal or written, etc.). However, B and C have a written contract specifically for 32 hours of consulting in one month. The contract between B and C is written such that B could have C support any customer of B, not just A.

Company A didn't utilize the full 32 hours of C's time during one month. Company A didn't inform C that less than 32 hours would be used prior to the end of the month. Thus, C was unable to inform B although there is no contractual obligation to do so. I do not know if A informed B prior to the end of the month, but I believe A did not inform B.

Company A will only pay B for the hours used. As a result B is only willing to pay C for the actual hours used because it is outside of their control that C didn't use the hours. Company B is also implying that they are not obligated to pay for anything other than the hours worked because C failed to inform them that fewer that 32 hours were worked until after the end of the month.

At this point C is wondering whether C has legal standing to recover payment for the full 32 hours?

I hope my explanation isn't too confusing. Thanks in advance for your advice.

[Disagreeable]

C needs to refer to their contract with B. If B has an objection to A's actions, they need to consult their contract with A.

[reliabilityguy]

That doesn't answer my questions, but thanks anyway.

[mmmagique]

Yes it does. You need to look at your contract and see what it says specifically. If you can post the part that addresses hours worked word for word, (leaving out any identifying information) we may be able to say more than just read your contract. We can't guess at what it says.

[reliabilityguy]

The applicable paragraph is...

"2. This Agreement is for the period commencing on July 1, 2013 and terminating on August 31, 2013. The Company hereby contracts with the Consultant for 32 hours per month for the months of July 2013 and August 2013. By mutual written consent of the parties, this Agreement can be extended beyond the initial period as agreed upon by the parties in writing."

TIA for your advice.

[mmmagique]

Ok, does the contract at all address what happens if the full 32 hours are not utilized?

[llworking]

My question involves business law in the state of: MI and/or OH

Here is the situation...

Company A engages Company B (an Ohio company) for 32 hours of consulting work in one month. Company B engages Company C (a Michigan company) to provide the 32 hours of consulting work to A.

I do not know the details of the agreement between A and B (i.e., verbal or written, etc.). However, B and C have a written contract specifically for 32 hours of consulting in one month. The contract between B and C is written such that B could have C support any customer of B, not just A.

Company A didn't utilize the full 32 hours of C's time during one month. Company A didn't inform C that less than 32 hours would be used prior to the end of the month. Thus, C was unable to inform B although there is no contractual obligation to do so. I do not know if A informed B prior to the end of the month, but I believe A did not inform B.

Company A will only pay B for the hours used. As a result B is only willing to pay C for the actual hours used because it is outside of their control that C didn't use the hours. Company B is also implying that they are not obligated to pay for anything other than the hours worked because C failed to inform them that fewer that 32 hours were worked until after the end of the month.

At this point C is wondering whether C has legal standing to recover payment for the full 32 hours?

I hope my explanation isn't too confusing. Thanks in advance for your advice.

Besides the other advice that you have been given, and the other question that still needs to be answered, you also have to look at this from a pragmatic/practical point of view as well.

If A is refusing to pay B, then B simply may not be in a position at all to pay you for hours when they didn't get paid for them. If you want the opportunity to subcontract with B again, you may not want to push this to the point where B doesn't want to work with you anymore. You need to be certain that you want to burn down bridges before you actually burn them down.

[reliabilityguy]

There is nothing in the contract addressing what happens if the full 32 hours is not used.

I plan to make a good faith offer and allow then a certain amount of time to utilize the remaining hours. However, such an offer may carry no weight if my contract wouldn't allow me to recover the full amount anyway.

TIA

[Mr. Knowitall]

If you believe you are entitled to 32 hours of compensation for each month, July and August, even if you don't perform any work during those months, you can sue the company that contracted for your services for the compensation you believe yourself to be owed. It may be that your contract entitles you to that payment. As others have indicated, win or lose, if you take that approach you should not expect that the company will utilize your services in the future.

As you were also told, the terms of the contract between the company that subcontracted to you and the company that hired them to do the work likely has no bearing on what you're owed or when. A possible exception would be if your contract provides that you don't get paid until the company that subcontracted to you gets paid.

Also, as an independent contractor, you aren't paid like an employee. Some companies take weeks or even months to issue payment. (Some never pay, but that's a thread for another day.)