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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10915
Experience:  Solicitor with 5+ years experience
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I have been asked to pay an invoice and I don't know whether

Customer Question

I have been asked to pay an invoice and I don’t know whether I am legally obliged to pay it. I own a limited company based in the UK. We are a start-up and have not commenced trading yet and we have no cash assets or money currently in the bank. We were looking for an agency to build our website for us. We were working for around 2-3 months to find agencies and we shortlisted down to three agencies. All agencies were aware that I was negotiating between different companies and as such they were working freely to win the bid. This involved corresponding with the agencies via email, phone calls and Skype as well as arranging meetings to discuss website features in more detail. I have now chosen an agency and two agencies from the shortlist are not happy that I have not chosen them. They have sent me an invoice for £1,050 and £5,000 and have requested I pay within 7-14 days otherwise they will seek further action through debt collectors or court proceedings. Both agencies are limited companies based in the UK.
Agency 1:
I have never met this agency, but all correspondences were done through email, call or Skype. From the outset, they needed to understand the features of the website so took time to send proposals to cost up the website build. These costs were too high, so they agreed to bring it down by 50% in order to remain competitive. I was not certain with their design aptitude so on the 06/08/2014 they offered to design an example homepage to prove their capability. They seem to recall me saying that if I were happy with this, that I will definitely choose them (over the phone). But, I made it clear via written message that it if I were happy, I will just put them into the shortlist for potential selection, as I need all agencies in the shortlist to have good designers in their team. They now want a payment of £1,050 for their work, although no mention of payment was made, and even stated it would be ‘free of charge’ when they offered to make the designs.
Agency 2:
I have met this agency twice and corresponded through email, call, Skype and SMS message. Similar to the first agency, the initial website cost that they were proposing was too high. I needed the price to be lower in order for them to be within our budget. Time was taken to get the budget reduced, and at the end it was still much larger than my budget could allow. During the process, they created project proposals to illustrate and breakdown the cost of the website. I would add to this and give more detail on each website feature to make it easier and quicker for them to cost. Where the confusion lies for this agency is that on 02/10/2014 they were under the impression that I was very serious about taking them on, but I just stated that I am ‘happy to start with the project’ and would like to choose the company (assuming all is well) but at this point I did not know the costs of the work, but was hoping that it would be within the £8K + VAT budget as they said that it could be achieved (over phone on 23/09/2014). On 25/09/2014, the agency stated they could complete the website build for £11k + VAT. When I then received the proposal through on 07/10/2014 it was much larger than I had anticipated at £12.8K and thus could not afford it. On 09/10/2014, an SMS message was sent from my phone to the agency to say that some areas of costing still need clarifying (as there were still additional costs to be made) and then I will be able to go ahead with a deposit, not that I agree to the price yet, but potentially after consideration. No significant further work by the agency was done after this SMS message. The outcome of the areas of costing for the outstanding features went through an initial price of £3,500 (quoted on 08/10/2014) to £1,250 (quoted on 09/10/2014), where the lower price removed features I expected from the website, until they said they could do one feature for free (quoted on 10/10/2014), which changed my entire outlook on the validity, cost-effectiveness and accuracy of the overall agency quote. From this point I felt that it would not be a good decision to go ahead with this agency due to their extremely high price, despite their best efforts to reduce the cost. No mention was made of billable time if I did not go ahead with this agency. They now request £5,000 for the time that they spent to draw up proposals and time spent during meetings etc. It was made clear from the very beginning that these agencies are in competition with each other (like any service company) and I am in no position to pay for their time in bidding for the project.
Conclusion:
I need to find out if I am legally obliged to pay each of the agencies based on the case provided. If I do need to make a payment, I then need to find out how I may go about doing so, as I simply do not have these funds available to me. Thank you very much for your time.
Submitted: 2 years ago.
Category: Law
Expert:  Ash replied 2 years ago.
Alex Watts :

Hello my name is ***** ***** I will help you with this.

Alex Watts :

For now please let me know whether you ever formally instructed or signed a contract with the agency who is trying to charge you?

JACUSTOMER-4b3uku2t- :

Hello, good to hear from you. No I never signed a contract.

JACUSTOMER-4b3uku2t- :

How do you mean 'formally instructed'?

Alex Watts :

did you ever say, hello please do this work?

JACUSTOMER-4b3uku2t- :

No, we were in negotiation phase since 05/08/2014. The closest we got to saying to do the work was as outlined in the case report to the left.

Alex Watts :

OK - then you dont need to worry

Alex Watts :

If you did not formally instruct, but negotiate and you never signed a contract then you can NOT be liable

JACUSTOMER-4b3uku2t- :

But I did say that I would be happy to proceed.

Alex Watts :

Only if you gave a formal instruction or signed a contract agreeing to the work would you be liable

JACUSTOMER-4b3uku2t- :

But that's when the cost did change.

Alex Watts :

But you have not, so you are not

JACUSTOMER-4b3uku2t- :

They are saying the following:

JACUSTOMER-4b3uku2t- :

We don't normally do designs by spending the costly time of our designers until projects are confirmed, but you led us to believe that the project was ready to be commissioned if you see convincing design from us which made us to put one of our senior designers to work on your designs.

The amount outstanding of 1,050.00 GBP is due on or before 1 Nov 2014. If you fail to pay this, we will have to hand over the case to our debt collection agency and that may affect your credit rating.

JACUSTOMER-4b3uku2t- :

that was agency 1

Alex Watts :

Ok - well I would not worry about this.

JACUSTOMER-4b3uku2t- :

This is agency 2

JACUSTOMER-4b3uku2t- :
Without Prejudice

Dear Rajen,

I write with great concern over you backing out of a project FDC has spent a lot of time in good faith helping you to shape into what you have today. We received written confirmation on the 2nd October 2014 that you had selected this company to deliver the project and on 9th October 2014 a SMS message detailing that you were sorting out a few points to move to making a deposit, which is total commitment in the written form.

This company has worked relentlessly on this project with good faith we don't accept that you feel you can just cancel this work without recourse. You will find attached an invoice for the total build of this project which you have committed to. To ensure that you understand this, FDC is a commercial company which does not take lightly to being messed about.

You have committed to the work, you have written to that effect, you are bound by this and we require a payment of £5,000.00 in compensation for the backing out of this project with in 7 days. If we do not received this we will take legal action against you in the court to recover the total project value, including costs and damages.

I look forward to receiving the payment to the bank account details on the invoice.

Regards
Alex Watts :

If they try and register a default you can sue them and apply to the court.

Alex Watts :

Again, the same applies. No contract no instruction

JACUSTOMER-4b3uku2t- :

So technically, I could say 'I agree to everything, I agree to the proposal you have sent over, I agree to send over a deposit, I agree to sign at a later date', but if I have not signed the proposal contract, they cannot hold me accountable??

Alex Watts :

Exactly - it was all negotiation and subject to contract

JACUSTOMER-4b3uku2t- :

Hmmm interesting

JACUSTOMER-4b3uku2t- :

So I have to physically sign the document for it to be valid?

JACUSTOMER-4b3uku2t- :

There's no other way around it?

Alex Watts :

Yes you have to sign the contract OR agree in email that they are formally instructed.

Alex Watts :

Negotiations are not enough

JACUSTOMER-4b3uku2t- :

I sent this email:

JACUSTOMER-4b3uku2t- :

That's fine, thank you for letting me know. I am happy to say that I am
>ready to start with the project and would like to choose FDC for the
>delivery of the website. I would be available for a meeting on Friday 3rd
>October if this is convenient for you?

JACUSTOMER-4b3uku2t- :

This is where they are most sensitive about me saying 'yes'

Alex Watts :

Ok - but even then this seems like negotiation

JACUSTOMER-4b3uku2t- :

The issue is that I essentially agreed to a previous price (£11K + VAT)

JACUSTOMER-4b3uku2t- :

but then I realised certain aspects of the website build had not been considered, so needed this costing up

Alex Watts :

ok

JACUSTOMER-4b3uku2t- :

Again when I say 'agreed', this is the agreement that you read in the email I just sent over

Alex Watts :

Yes I did.

Alex Watts :

But again I think that is a counter offer, so again not a contract, or even negotiation

JACUSTOMER-4b3uku2t- :

counter offeer?

JACUSTOMER-4b3uku2t- :

im trying to play devil's advocate here :)

Alex Watts :

Yes but you have not said outright I accept, but yes, that is ok - but.......

Alex Watts :

So counter offer

JACUSTOMER-4b3uku2t- :

But if I did say outright that I accepted

JACUSTOMER-4b3uku2t- :

Because I did in that email no?

JACUSTOMER-4b3uku2t- :

It's just that I forgot to ask about another website feature

Alex Watts :

Yes but there is still NO CONTRACT

JACUSTOMER-4b3uku2t- :

right

JACUSTOMER-4b3uku2t- :

But I was reading that contract can be verbal/written too?

Alex Watts :

There needs to be

Alex Watts :

Yes.

Alex Watts :

If they said: This is our offer X,Y,Z

Alex Watts :

And you wrote back and said: I accept

Alex Watts :

That is a contract

Alex Watts :

You said you are ready to start. That does not say that you agree, or accept their terms at this date

Alex Watts :

You mention a date for 3rd Oct

Alex Watts :

That suggest negotiation

JACUSTOMER-4b3uku2t- :



Is it right that to form a contract you need four things: offer, acceptance, consideration and intention to create legal relations?



JACUSTOMER-4b3uku2t- :

right ok

Alex Watts :

Yes

JACUSTOMER-4b3uku2t- :

Right OK, I have to go now, but I will be back a little later on. Thank you so much for your time.

JACUSTOMER-4b3uku2t- :

What is the next step I should take?

Alex Watts :

Ok, can I clarify anything else for you today please/

JACUSTOMER-4b3uku2t- :

I obviously dont want to go into court

Alex Watts :

You need do nothing

Alex Watts :

The ball is in their Court

Alex Watts :

But even if they took you to Court if any claim is less than £10,000 it would be a small claim

JACUSTOMER-4b3uku2t- :

:) nice pun

Alex Watts :

They would need to prove you agreed to a contract

JACUSTOMER-4b3uku2t- :

I sent a text on 09/10/2014 that 'some areas of costing still need clarifying (as there were still additional costs to be made) and then I will be able to go ahead with a deposit'

Alex Watts :

Ok - so that is a counter off or indeed negotgiation

JACUSTOMER-4b3uku2t- :

still not contractual?

Alex Watts :

Its not acceptabcem

Alex Watts :

Acceptabce

Alex Watts :

No

JACUSTOMER-4b3uku2t- :

I am a dental student too

JACUSTOMER-4b3uku2t- :

I cannot have court proceedings in my criminal records

JACUSTOMER-4b3uku2t- :

will this go to my record?

Alex Watts :

No

Alex Watts :

Its not criminal.

JACUSTOMER-4b3uku2t- :

Oh ok

JACUSTOMER-4b3uku2t- :

what about an enhanced CRB?

Alex Watts :

At most if you went to Court and lost it could be a county court Judgment

Alex Watts :

No, not on CRB

JACUSTOMER-4b3uku2t- :

excellent ok

Alex Watts :

Even if you lost at Court and paid in 1 month you would have no CCJ

Alex Watts :

But no CRB, anything

Alex Watts :

its not criminal

JACUSTOMER-4b3uku2t- :

I dont have the money to pay a solicitor for court

JACUSTOMER-4b3uku2t- :

if they were determined to take me, would I have to oblige?

Alex Watts :

Indeed. No

JACUSTOMER-4b3uku2t- :

Why?

JACUSTOMER-4b3uku2t- :

If I don't go, I will lose?

Alex Watts :

The matter can be considered on the papers. You dont have to attend.

Alex Watts :

Better if you do, but you dont have to

JACUSTOMER-4b3uku2t- :

right ok

JACUSTOMER-4b3uku2t- :

In your experience, is this often a scare tactic, or is it pushed through?

Alex Watts :

Scare tactic

JACUSTOMER-4b3uku2t- :

agency 1 stated they will get debt collection agencies if i do not pay in 2 weeks

JACUSTOMER-4b3uku2t- :

Does that go through the same court proceedings?

Alex Watts :

Dont worry about that - debt collection agencies cant do anything

JACUSTOMER-4b3uku2t- :

lol ok

Alex Watts :

Yes they could

Alex Watts :

Can I clarify anything else?

JACUSTOMER-4b3uku2t- :

Thanks Alex, I have to go now, but I'll speak later on. You have settled my mind significantly.

Alex Watts :

If this does answer your question can I ask you to rate my answer - the button should be at the bottom of the screen

Alex Watts :

If you need more help please click reply

JACUSTOMER-4b3uku2t- :

Hi Alex,

Just wanted to ask about this case: Would I need to get a solicitor to write a letter to these agencies? Also with one of the agencies, I used a document that they created as part of the proposal stage to give to another agency to get an estimate quotation. Because I used their work for this purpose, do they have any right for payment?

Thanks

Alex Watts : You can get an solciitor but that may cost £150 or so.
Alex Watts : they do not have a right to payment.
Alex Watts : Does that help?
Alex Watts :

If this answers your question could I invite you rate my answer before you leave today.


If the system won’t let you please click reply.



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