If you have a client who has stopped paying you, you might conclude the simple solution is to stop providing the service. Hold that thought.
As a business owner, I understand your reaction.
As a lawyer, I can tell you the first thing to do is review your contract with the client.
Your contract will provide guidance for what you can and can’t do in this situation. If you don’t have a written contract, common law principles may apply. But be very careful before you simply stop performing the service. If you have a poorly-written contract, you may not have standing to stop working because you haven’t been paid. This can be one of those times when a contract form found on the internet or drawn-up without solid legal consultation results in unintended consequences.
It really comes down to the terms of the contract.
A well-written contract that you entered into at the beginning of your engagement should certainly say you can stop doing the work if the other party doesn’t pay. But often business owners become my clients because they have signed contracts without talking to me first, and the contracts don’t have sufficient provisions.
If you are providing a service and being paid in installments that suddenly stop, or whatever the scenario that finds you working without compensation, don’t overreact. Check your contract. Make sure you don’t dig yourself into a deeper hole than you already are. Then proceed accordingly. Be very careful.
What issues have you faced in your company? What have you done to avoid getting caught in this situation? Join us in the comments below and let us know your thoughts and experiences.
This posting is intended to be a tool to familiarize readers with some of the issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity. Freeimages.com/Photographer Odan Jaeger.
About the Author
Shawn McBride — R. Shawn McBride is the Managing Member of The R. Shawn McBride Law Firm, PLLC. Shawn works successful, private business owners in their growth and missions to make a company that stands the test of time. You can email R. Shawn McBride or call (214) 418-0258.
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