Holsee's Blog

Introduction:

Don’t count your chickens until they have hatched.

In this case swap eggs for contracts and chickens for payments.

This is a tale of why it is important to secure your work with a contract, being a nice guy can lead to you getting burned if you’re not smart so be careful.

The Story:

Recently I approached an acquaintance that was developing a funky product and was in need of some expertise which I knew I could offer.  I had no real desire to make money from this project as it was something I would do for free.

I informed them I would help develop the product, teaching them as I go along for free if the product was made Open Source. Open Source development would protect me legally as the contributor to the project, whilst benefiting the world (as I like to think open source does).

This was not going to be the case.  I was told as the product was to be commercial, so I put a pretty generous financial proposal for my time which was subsequently “Accepted”.

Things looked good at this point; I was almost counting my chickens for another payday.

I knew from my research into good practises in contracting and advice passed onto me that if there is money involved and a commercial product that (at least) 3 things should be checked:

• Credibility* of the Client and their ability to pay (Credit Check).
• The Indemnity* agreement as you could lose it all if things go sour.
• There is a Contract* which both parties agree to.

Note: I thought I knew the client and things were very friendly between us so I skipped the Credit Check.

Things were good, spirits were high and I was genuinely getting excited about working on the project!  I had one week to work on this project which was more than enough time.

Things started to worry me whenever my request for a contract was met with odd behaviour.  There was a lot of fluff spoken to me in reply to my solid enquiries to getting a contract sorted.  The client assured me everything was fine and that the money (which I had officially invoiced them for) was on its way to my bank account for the Monday morning which was to be the first day’s work.

Payment didn’t appear in my bank account and it was now Wednesday of the week, nor was there any official response to my invoice.  In the meantime I was working overtime on another contracted project in order to free up time for the contract in question later in the week.  As the delay in payment was leading to time running out for the project to be completed.

At this point I started to throw some functional prototypes together, but I kept them close to my chest as there was no sign of a contract or the payment which would allow to me to start working on the project properly.

The inner sceptic kicked in, and I decided to make it my policy not to work anymore out of contract on this project as things were starting to smell fishy and I believed any time I contributed would most likely go unpaid and I would have been taken for a free ride so to speak.

In the meantime I was working away happily on my main contract which took precedence, so it was not like I was losing anything, but I certainly wasn’t gaining anything other than experience dealing with an awkward client.

I made it clear I was not going to take on any responsibility for the indemnity for the client, for working on this project as I knew the client and they spent a lot of time in the courtroom due to prior projects, and this scared me to be honest.

After seeking advice from people I trust they helped my realise that without a contract I would be powerless to claim for the work I would deliver, not to mention the legal implications regarding IR35 and liability.

My general policy is, if I am to undertake legal liability for a commercial product whilst working as an independent contractor I will obtain Liability / Indemnity Insurance for the project, and this costs more and it reflected in the price for my services, simple.

It was now Thursday and payment was still stalled. At this point I started to question the funding for the project and as I knew the funding was coming from a 3rd party I thought I would risk not having a contract if I was allowed to have a conversation with the funding party in the deal.

As you can see now, what started off as a nice little project and a kind offer on my part to help out a fellow professional turned into a mess.

Friday morning came, no payment.  This meant that if I was to undertake the work at this stage I would be doing so on good faith.

The client wished to meet up and was eager for work to begin.  They thought I was being awkward, but I knew I had to tread lightly and play this smart by not getting involved until it was on paper and I was protected.

At this stage:

I had forgone the preliminary Credit Check on the Client:

- This meant I not sure if they could pay me.

I was willing to commence work in question without a contract:

- This meant I didn’t have a leg to stand on if I did the work but was never paid.

The payment was 5 days late and the client was acting as a middle man without any real answers.  I just continued to play it cool, I had offered enough of a concession at this point that I wouldn’t have a leg to stand on, but at least I was trying to get things going. This being said, I still needed some kind of guarantee as the client’s words were growing increasing empty and the buck was being passed constantly onto a third party who apparently was having issues with the payment (which I found hard to believe from my prior experience with contracts and payments).

So I put it to the client that if they passed on the contact details of the funding party (who was meant to be transferring to payment to me but had not done so to date), that I would get the payment sorted directly with them, iron out any problems and I in the mean time I would commence work regardless of there being no contract nor payment received. I know now that this was me being too nice.

The response I got when I asked to be connected directly to the funding party was "That’s no problem", but without the actual details which would enable me to do so.

When I enquired for the details the response I got was that the whole thing was off.  I breathed a sigh of relief and had a giggle. Can you imagine if I had of worked on good will all week with no payment, no contract, no insurance… only to be told on the Friday afternoon that the whole thing was off.

The Lesson Learned:

Don’t ever sell yourself short; don’t forgo your legal protection and security of payment when the client is being awkward.  You may be like myself and just want to get to the code (or the task in hand whatever it may be), but keep your head screwed on.  If the client is legit they should have no problem agreeing to a contract being signed at the very beginning and actually doing so.

When it comes to the pre-project contract and payments and you find client is constantly not sticking to their promises and/or passing responsibility of the failings onto other 3rd parties, its often wise to question them and get some confirmation that you’re not being taken for a ride. But when things start to smell fishy it generally means something’s up so don’t begin work until your protected via a contract (or at the very least the money is in your account).

Even though I made many concessions to try and get the project started including forgoing the contract signing, and willingness to start without payment, I did make sure I didn’t start until I was 100% sure I wasn’t going to be screwed over, I did so by challenging the client to give me the so called funding party contact details in order to confirm with them what I was being told the entire week regarding the stalled payments etc.

Hope this was helpful!

Feedback:

I’m always interested in hearing what others have to say, so comments are very welcome… please keep them constructive and on topic!

• The client thinks I was being awkward, do you?
• What could I have done better?
• Do you think I acted professionally?

I’m interested in hearing your thoughts, Thanks!