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  1. #1
    Join Date
    Oct 2008

    Default Failure to Pay for Services Rendered

    My question involves independent contractors in the state of: Michigan

    We own a very small corporation in the state of Michigan (the Supplier). We have been hired to perform services (for a large Navada company - the Principal) in the state of Pennsylvania.

    In the contract we gave to the Principal, which they signed in August, it states:

    "Payment for the services rendered by Supplier and the employees and agents it supplies shall be made at the rate of $60 per hour. The Principal agrees to provide a mandatory paid 40 hours per week. The Principal agrees to pay the federal standard mileage rate for mileage incurred by the Supplier to and from facilities the Principal owns, operates, or contracts with. These terms shall be modified only upon the written consent of Principal and Supplier. Supplier shall be solely responsible for compensating the employees and agents who have provided therapy services through Supplier on Principalsí behalf. Payment for services rendered shall be mailed or directly deposited into Supplier bank account weekly following the week in which the services were rendered."

    In another section:

    "This Agreement constitutes the entire agreement between the parties, and may not be altered or amended, except by written agreement of both parties."

    After a few weeks of not getting paid, we went high up the ladder, at which time the COO of the Principal, who actually signed the contract, stated that he misread the contract. He had made a change to the contract on another page:

    "and continuing until either party terminates the Agreement upon at least thirty days (30) days prior written notice to the other party."

    He crossed out 30 and put in 45. That was fine with us. Contract signed. We moved to Pennsylvania and started working.

    Getting back to our conversation with him. He claims that he thought that meant he was to pay us on a 45 day schedule. He admits that he was wrong. However, he refuses to pay us on the weekly schedule as stated in the contract. In a follow up call, he offered to pay us what we were owed on a weekly basis until he was caught up and then every two weeks. We agreed. The verbal addendum was not written as required in the contract.

    The week following the coversation, he paid us for our first two invoices. A month has gone by, we've continued providing service, submitting invoices weekly, and we haven't recieved any payments since. He hasn't abided by either the written contract or the verbal addendum. He claims that a big check is en route today, but we will still be owed for 2 -1/2 weeks (invoices which they have). He still claims that he will not pay weekly and still admits to making a mistake in his changes to the contract.

    At this time, we have unofficially ceased providing services at least until we recieve this latest check. I have written an addendum, which I'm prepared to send to him which outlines, in great detail, the payment schedule for the remainder of our contract - the term of which ends in three weeks.


    Should I send the written addendum, which outlines a two week payment schedule for the remainder of the contract? We're not sure if we can trust this company to another written contract, but we'd rather not lose several thousand dollars either.

    Should we cease working immediately and permanantly, as the written contract is currently breach? Even if we recieve the large payment today, we will still be owed for two full weeks of work, which he claims he won't pay until we work out another payment schedule.

    If we do stop working, we need to relocate immediately to another state where we will start a new contract.

    Obviously, we were expecting to work for another three weeks. We will incur costs which hadn't expected. If we hand this to a lawyer, will we be entitled to being reimbursed for those legal expenses? Our contract does not say we will. It only says the following:

    "Should either party initiate legal action, this Agreement shall be governed, construed, and enforced in accordance with the laws of the State of Michigan without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws or any other jurisdiction other than the State of Michigan. No action may be brought related to this Agreement except in the state court of competent jurisdiction in Chippewa County, Michigan. Supplier irrevocably consents to the exercise of personal jurisdiction over it by such court."

    Please share what we are entitled to and what our rights are.

    Thank you!

  2. #2
    Join Date
    Sep 2005
    Behind a Desk

    Default Re: Failure to Pay for Services Rendered

    Your options seem to be....

    1. Work something out where you get paid and you continue to work with this company;

    2. Stop working with the company, then try to figure out how and when you will be paid for past work (removing the leading incentive for them to work to quickly resolve this problem); or

    3. Stop working with the company and sue them for the money they owe. Expect a judgment in about a year, perhaps a bit longer, and to pay a lot of legal fees.

    As a general rule, big companies don't pay on a weekly basis. Big companies often don't even pay on a timely basis. And, given the near certainty that they process their own payroll on a biweekly or monthly schedule, you want them to process and pay your bills faster than they process and pay their own employees. When you're working with big companies, you should expect that they will want to pay you on a schedule consistent with their established systems and schedules for processing and paying invoices. Which leads me to ask, is this the first major contract you have ever landed?

  3. #3
    Join Date
    Dec 2007

    Default Re: Failure to Pay for Services Rendered

    I do have to say, though, that 45 days after the company's receipt of your invoice is uncommon. The great majority of vendors require payment in no more than 30 days from the invoice date.

  4. #4
    Join Date
    Oct 2008

    Default Re: Failure to Pay for Services Rendered


    Thank you for your responses. We took the issue up to the CEO and the issue was resolved within hours of his reciept of our email. We've been paid up and have returned to work with bi-weekly payment terms (in writing this time).

    To answer your question, no this isn't the first major contract we've landed. We work almost exclusively for major companies in our industry. This is, however, our first breach of contract we've had to deal with. We've often gotten paid immediately upon reciept of the invoice or on a weekly schedule. We've never had to wait 30 days, much less 45 days. Two weeks isn't bad, but the problem was they weren't up front with us, and they were always reluctant to put anything in writing. With the current credit crisis going on, we were pretty scared because we weren't sure if all this was a matter of desire or ability to pay.

    Anyway, the company blinked and the issue is resolved ... we hope. We only have two weeks left here and we're off to Texas to work for another company. I doubt we will ever work for this company again.


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