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Jenny
Jenny, Solicitor
Category: Law
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Experience:  Qualified Solicitor specialising in Employment Law and general legal matters. Please start your question For Jenny Only
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Non payment of contract fees, consistently and fairly paid

Customer Question

Non payment of contract fees, consistently and fairly paid over 5 years and the precedent for payment set until terminationI was engaged for 5 years under contract to my consultancy and sales business to build and develop a specialised business unit for an established £15m company in England. The new BU was in a complimentary business sector to their 50yr established sector and traditional business, which was under massive margin erosion and threat so diversification was sound. It involved all aspects from product, solution, selling, customer acquisition, margin, purchasing. I had a contract that paid a monthly fee, expenses and a Gross Margin Share. The Gross Margin Share was paid at 20% of the business billed through that business unit. They were happy with the work, increased my monthly fee and even put me on a 90 day contract cancellation notice. The Gross Margin Share had to be claimed by me and was always paid. There was a big push to sell very high margin maintenance contracts also. This I did and secured a five year contract as a single purchase order. They always paid me but after a new Chairwoman came in, closed down the business unit as it was not "core" they have refused to pay this outstanding Gross Margin, and less importantly, miss calculated and underpaid other projects Gross Margin. My contract referred to an appendix for GM payments but for the 5 years they always paid but once they terminated refused to pay what was an established and proven pattern, even though the actual contract did not state 20% forever. The reason was because they needed to get the business started and wanted to have the flexibility for us to agree alternative GM payments in the future and then an appendix/letter could be written and signed for both parties to agree that without having to go back to the lawyers to have the contract re-written.So they always paid me 20% when claimed over the 5 yrs, they only refused to pay what was outstanding after they terminated the contract saying we don't need to. My position is they surely have set a president of doing so therefore what do I do to encourage them to do the right thing. I've met with their CEO and he says they have paid everything that is due and that's the end of it. I can prove they have not paid against this £200k contract. Indecently the 90 day notice from 30 days and increased fees were changed via letter so there was also a president for change. No letter or even suggestion of their being an unwillingness to pay the 20% due on the final orders was ever made until after contract termination.Thanks to advise - MJ 07899 998 122
Submitted: 7 months ago.
Category: Law
Expert:  Jenny replied 7 months ago.
Hello my name is***** am a solicitor and I am happy to help you today. How much money do you think they owe you and are you asking if you can claim in breach of contract?
Customer: replied 7 months ago.
I don't know what to do or how to get them to pay. They have retained legal and just say there is nothing to defend as they've paid all they should have. I suspect if I talk contract they will just say show us the 20% GM reference. That was done via email 6 weeks after counteracts and paid always up until they terminated and then refused to pay this one, I guess because it's large. The amount will be between £18k and £30k, they would have to produce metrics that I can validate against with regards ***** ***** of running the contract. To see proper amount.
Expert:  Jenny replied 7 months ago.
Does the contract specify the 20% and say what will happen on termination?
Customer: replied 7 months ago.
No it talks of a scheme to be defined, that scheme was initially communicated via email and always paid for the entire 5 yrs only not paid on termination. I add a couple of extracts for you, specifically the one indicating Gross Magin. I don't have electronic copy of the contract on this PC.
Expert:  Jenny replied 7 months ago.
Can I just be clear are you seeking to recover a sum for a period that you were working there under the contract?
Customer: replied 7 months ago.
Yes, I am looking to recover the sum for the the £200k order for Maintenance that was for an extended 3 year period. I won the original customer, I was paid under contract for year 1 & 2 I then sold the £200k 3 year extension to them and presented to the CEO whilst under contract. He was delighted as it's very high margin. The company still kept that contract despite closing the business unit. I was not paid for the GM on the last 12 months I was still working and under contract and I have not been paid anything since. They can calculate 3 years costs on the contract now. The order was a single purchase order won solely by me , delivered to the accounts team and the company has benefited from at least 120k margin to their business, I have not been paid anything. ALL maintenance was on a single order booked whilst I was under contract and booked by me. I hope this is clear.
Expert:  Jenny replied 7 months ago.
Yes it seems that whilst the contract is not clear, you have an argument that there is a contractual right to this payment. You can send them a letter before action stating that you believe they are in breach of contract for failing to pay the money and say if they do not pay you in full or come up with a reasonable proposal you will have no alternative but to take them to County Court to recover your losses in breach of contract. You should give them a limit of 14 days to pay you or give a suitable proposal. If they fail to pay you can then raise a claim in the county court. If you have any further questions please do ask. If I have answered your question I would be grateful if you would take the time to rate my answer. Thank you and all the best.
Expert:  Jenny replied 7 months ago.
Hello Mark is there anything else you would like to know?
Customer: replied 7 months ago.
Thanks for this steer, How do I go about county court?, How much does that process cost? How long do I have to do so, Xyrs?I have told them that I'd have no choice but to go legal previously, which I don't want to do, but because they have company legal firm retained they came back and said after referring the situation to them they have no case to defend.
Expert:  Jenny replied 7 months ago.
You would need to get hold of a form N1 from the County Court and complete it. You have 6 years to bring a claim from the date of breach. Given the sum of money involved it may be worth instructing a high street solicitor with litigation experience. Please remember to rate my answer as I am not otherwise paid for my time working on your question. I will be happy to answer your follow on questions.
Customer: replied 7 months ago.
Thanks Jenny, I'm into a meeting and will check your response and rate when I come back.My point that I'd like your comment on is that given they always paid, regardless of contract wording or contract date etc, I hope that a court would likely see that they only stopped paying when they thought they could get away with not doing so having served notice on the contract. That previous 20% payment was the de-facto precedent set and honoured for all other business apart from this. Is that an important aspect of my case as I fear they will have lots of retained legal who will no doubt run legal words and rings around the contract when the reality of what happened for 5 years should be evidential of the agreement we operated under.Finally how do I download the transcript of our conversion? Thank you
Expert:  Jenny replied 7 months ago.
Yes, through custom and practice and performance of the contract you can prove the right. You can log on and print it off at any time.
Expert:  Jenny replied 7 months ago.
Hello is there anything further you would like to know as I can see that you have not yet rated my answer to finish the process.

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