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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3843
Experience:  Solicitors 2 years plus PQE
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End of June my contracting Ltd entered into an open-ended

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Hi, end of June my contracting Ltd entered into an open-ended Consultancy Agreement with my first client. My client failed to pay in full two monthly undisputed invoices in time. He denied having received the first invoice in paper after the contractual 14 days payment period, demanding electronic delivery only. (I made a few mistakes in my very first invoice; he accepted the corrected version and the payment period started from the date of receipt of the corrected version.)
He made one small test payment upon receiving the first corrected invoice and a partial payment (+/- 10.25% of the total amount due at that time) after the due date on the second invoice. He is now late by a month on the first invoice and by two weeks on the second invoice. (I sent him several reminders and early this week a notice that I will be charging interest if he doesn't pay in full within 7 days, currently both by email only.)
When discussing the first invoice he admitted the company was unfunded (and was so when entering into the agreement and failed to notify me when an expected investment did not materialise). This was not discoverable because the company is less than a year old and does not have a credit history. Lately the situation of another company (to which the company under the agreement provides IT services partially serviced by my company) changed materially and he stated again he has no funds to pay me from.
In addition, because of the material change he asked me to stand-by and not provide services until further notice. Since I'm already suffering financial damage and I cannot perform duties under the contract and cannot expect payment if I were able to perform my duties, I would like to terminate the contract. My question therefore is this:
Can I only terminate for convenience, requiring a two weeks prior notice as per the Term clause? Or would it be possible to make this a repudiatory termination for breach of the Fees and Expenses clause that explicitly states "The Client will pay such invoices within 14 days of receipt."?
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
If I were in your position I would just exercise your right to terminate for convenience, as this will be without prejudice to any rights you have accrued prior to the notice date. Do you have a contractual right to terminate for convenience?
I would note in future if you have a company like this, with an uncertain credit history, I would ask the director for a personal guarantee.
I look forward to hearing from you.
Kind regards
Customer: replied 2 years ago.
Thank you for your response!I was inclined to just terminate for convenience but just wanted to make sure I did not give up the other option without legal opinion. I asked in an email if the counterparty was open to waiver the notice period of 2 weeks under clause 1 but he's extended his holidays and has not responded yet. I want to send notice today though for guaranteed delivery tomorrow.Yes, of course, next time I will get some form of guarantee or a letter of credit prior to signing and maybe even have a clause in the contract stipulating terms for termination in case of insolvency etc.One more thing: if there is no wording in the contract about when the notice of termination goes into effect, can I state 1 business day from the date of notice as specified in the letterhead?
Thank you.
If you are sending the letter by guaranteed next day delivery then 1 business day is fine.
The notice should make clear that it is without prejudice to any rights accrued up until the date of the notice.
Kind regards
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