Results 1 to 20 of 20
  1. #1
    Join Date
    Jul 2005
    Location
    Dallas, OR
    Posts
    6

    Suspend account for non-payment of other services?

    Greetings,

    I am in a bit of a conundrum at the moment and hoping you fine folks can give me some advice. It's a bit of a legal issue, but I'd love to hear opinions.

    The scenario:
    I have been working for a magazine publisher for about 3 years, providing web design, development and content editing services. I built their site using a CMS and implemented many custom modules and created custom themes for them. I also did alot of customization of various modules and wrote some plugins to do some very specialized functions.

    At first, they were hosted on a shared server before moving to a dedicated server. After about a year, they decided that a dedicated server was overkill for their needs and asked if I would host the site for them. About two years ago, I started leasing a VPS and moved their site onto it. So, in addition to paying me for web design services, they started paying me for hosting services.

    They had always paid their bills with no problem, and they even paid my way to a few conferences in various places, all expenses paid. Suddenly, in August 2006, they stopped paying their bills. I felt like I had developed a very good relationship with them and even felt like they were friends of mine. I continued to do web design work for them and host their site even though they didn't pay right away... you could say I fell hook, line and sinker for their excuses. After relentlessly bugging them to pay their bills, I stopped doing any web design stuff for them in early December 2006. I did continue to allow their hosting account to stay online.

    A week ago, they finally decided to pay for the hosting services up through December 2006. They also paid $1,000 toward a $6,100 bill for web design services. But they also sent me an email stating that they had to decide how much they "should" pay me of the remaining bill and if they should even pay it at all. They had me do alot of work on a database structure and then decided to change the scope of work, which meant that all my work was wasted. The money for web design that they still owe me dates back to August 2006 and I have billed them every month.

    So here's my question: Do I have a legal right to discontinue their hosting account for non-payment of web design services? What if they paid for hosting through the end of January 2007 but still didn't pay the web design bill?

    Even if they theoretically paid for the hosting services, I feel like I have a legal right to suspend their hosting account until I receive payment for ALL services rendered. What do you think?

    Thanks for taking the time to read this lengthy message. Any and all responses are greatly appreciated.

  2. #2
    Join Date
    Aug 2004
    Location
    Indiana
    Posts
    1,205
    Did you get what they wanted done in a formal agreement of some sort?

    According to my limited study in business law, agreements up to $500 may be "informal". I don't know if I'm using the correct term since it's been a while, but that's basically it.

    You shuld consult a legal professional if the way business was conducted was proper. Did you give them an estimate within 10% of the total bill? If so, did they make a clear agreement to it? Can you prove that they did?

    When working on projects like this, you really need to make sure that you have your end covered.

    I'm also questioning those trips to conferences - why did you accept? You do realize that by accepting these things, they may affect what kind of money you ask for? From what I've seen in consultants, many will avoid accepting things like this because they want to have the most power possible when negotiating the price at which they work.

    As for an answer to your question - it depends on everything I've said so far on the topic of the agreements, formal/informal contract/agreement, etc. You need to consult the right people and find out whose side the law is on and if you fulfilled the requirements. If there is an issue, aim for a compromise and prepare for the future. This is part of what I feel is the maturing process of providing services - these are all perfected ovver time and should be taken as lessons.
    Ankit Gupta - Cernax Hosting
    "We're always second in the industry, the customer comes first."

  3. #3
    Join Date
    Jan 2004
    Location
    Boise, ID
    Posts
    2,453
    It depends on the state, but if Oregon is like Idaho then Verbal Contracts are binding.

    Also they potentially would have to dispute up to November's billings in court because they failed to dispute them at the time of reciept and they are acknowledging receipt of the bills.

    From what I gather they haven't paid for January yet either so you can suspend them right now.

  4. #4
    Join Date
    Jul 2005
    Location
    Dallas, OR
    Posts
    6
    Anky,

    Thanks for your quick response!

    Yes, I do have a contract. It states that I will be compensated on an hourly rate ($60/hour) for as many hours as needed to complete the projects provided by the client. That's not word-for-word, but you get the idea. Their attorney prepared the contract, but I had an attorney review it and give me the thumbs up.

    I attended the conferences mainly because the client wanted to meet in person. We often discussed my future and they also wanted me to see first hand what they do. But the main thing they wanted was face-to-face meetings so we could spend hours discussing concepts for the website and my involvement. Also, my contract does state that they will reimburse or pay up front for expenses related to meetings and such.

    My attorney has been in the loop on this situation and I am meeting with him next week. But I thought while I was in this waiting period, I would see what kinds of opinions were floating around. Especially from those with experience in the field. Who knows, maybe the attorney will find the various opinions useful.

    Larry,

    Yes, technically I could pull the plug for that reason. Supposedly, the "check is in the mail". They seem to be making an effort (sort of) to keep up with the hosting. I shouldn't be so nice, but I have had such a great relationship with them for the last few years that it's hard to give up I guess. Plus I would like to hear what the attorney has to say.

    Thanks guys!
    Last edited by DynaWerx; 01-11-2007 at 03:09 AM.

  5. #5
    Join Date
    May 2004
    Location
    Central Scotland
    Posts
    245
    I personally think if you've been paid $1,000 out of $6,100 then rather than ask on a web hosting forum where no one can give you exact advice, you should invest some of your $1,000 in the same attorney that 'gave you the thumbs up' and ask him or her what the hell is going on. You say you are already meeting with him so what you want to do is ask if you have the legal right, but also make sure you are absolutely clear on the whole situation.

    It's easy to drift off and tell a white lie here and there that you think is not important to make the situation sound worse, everyone does that from time to time, so aim to be honest about the whole thing.

    Also, MAKE SURE if you do suspend the website that you are not liable for loss of earnings if there is any online subscriptions etc as I do believe that if you suspend the website, and they take money via that website then they can claim against you.

    Now bear in mind, I'm in the UK, our laws are much different here and I'm no lawyer. We've all heard of cases of people breaking into houses and falling while in the house and claiming the house owner, and they usually win. Different senario completely, but Just because they were in the wrong for burgalury, doesn't mean they can't claim. Therefore I'd make doubley sure your attorney knows every detail and you get something in writing from him to back up his answer. I'd even suggest you allow him to contact your client on your behalf then go seek a debt collection agency to claim your money back for you.

    Good Luck and I hope you keep us up to date with your outcome.
    WKD Banners | Make the most of your advertising!
    Designing banners since 2004 | Visit our Website www.wkdbanners.com

  6. #6
    Join Date
    Jun 2001
    Location
    Gotham City
    Posts
    1,852
    I agree with lochie, consult a professional. Don't post too publically about this kind of stuff. Although you haven't mentioned the magazine by name, your URL is visible in your profile. If it is in any way associated with the magazine it will further deter them from paying you.

    Be polite, ask them to settle it in full. If they refuse, hand over the matter to legal counsel. Also give them a warning before turning off their webhosting services.
    [[ Reyox Communications / USA based cloud servers & support / 9 years of hosting websites ]]
    [[ Affordable ASP.NET4, ColdFusion, PHP & MS-SQL, MySQL, cPanel/WHM & Windows Reseller Hosting + Virtual Private Servers ]]
    (www.reyox.com) - Mention WHT and get a discount on your first month!

  7. #7
    Join Date
    Sep 2003
    Location
    California, USA
    Posts
    392
    In my opinion unless they are going out of business they owe you all of your $6,100. Your contract states $60 an hour for work given. It does not stated $60 an hour for work used. It is there call to use your work but anytime they have you work or allow you to continue on a project is them consenting to paying you the wages that where set forth in the contract.
    I would keep the hosting seperate and try to be patient and let them know you need full payment on services rendered within ??? period of time. Also, if they fall behind on the vps payment again you will have to decide how you want to handle either charging them late fees, one more chance, or a warning with a reasonable amount of time and than pull the plug. (make sure you document all of your warnings and logs to them)
    Sometimes you have to play a little hard ball, but you need to be carefull you don't push to hard. Since you are in the right, you may be able to get payed (all of your money ;-) ) without really damaging the relationship and heading off to court.

  8. #8
    Join Date
    Oct 2002
    Location
    /roof/ledge
    Posts
    28,088
    You can't hold thier account hostage over non payment for other services, IMHO. If they don't pay the hosting bill, turn it off. If they don't pay the contracted invoice amount, send it to collections or your lawyer if all else fails.

  9. #9
    Join Date
    May 2004
    Location
    Central Scotland
    Posts
    245
    I tend to agree with bear on this one occasion. If the hosting and design work started on the same day on the same invoice then I'd disagree, but that's not the case.
    WKD Banners | Make the most of your advertising!
    Designing banners since 2004 | Visit our Website www.wkdbanners.com

  10. #10
    Join Date
    Jul 2005
    Location
    Dallas, OR
    Posts
    6
    Thanks everyone. I'm going to play it safe and wait to see what Mr. Attorney has to say. I'm thinking that Bear and Lochie are correct -- as much as I'd like to shut them off, I don't think I'll legally be able to do so since they are treated separately.

    This situation will definitely encourage me to include some different language in my contracts...

  11. #11
    Join Date
    Oct 2002
    Location
    /roof/ledge
    Posts
    28,088
    Quote Originally Posted by lochie
    I tend to agree with bear on this one occasion.
    I knew I'd get to you sooner or later.

  12. #12
    Join Date
    May 2004
    Location
    Central Scotland
    Posts
    245
    Credit where credit is Due bear, it's easy to advise people to 'give them hell for not paying' just because the non-paying customer deserves it, but when you even do have the right to do something, it's often better to just learn a lesson and forget about it. Saving your brands reputation can often be worth more than $6,100. I guess everyone has their own opinions, and it's personal choice, but professionally speaking I'm glad DynaWerx has not let greed take over his judgement.

    Gold star for DynaWerx in my opinion! But please do keep this thread going with updates. I reckon this could end up a valuable thread & lesson to others.
    WKD Banners | Make the most of your advertising!
    Designing banners since 2004 | Visit our Website www.wkdbanners.com

  13. #13
    Join Date
    May 2004
    Location
    Central Scotland
    Posts
    245
    Sorry to bring this topic up again but like I said, I reckon this thread could be a valuable lesson. I was just interested in hearing how things went with DynaWerx and his Attorney. Is there any update on this?
    WKD Banners | Make the most of your advertising!
    Designing banners since 2004 | Visit our Website www.wkdbanners.com

  14. #14
    Join Date
    Jul 2005
    Location
    Dallas, OR
    Posts
    6
    Well, what it boiled down to was deciding whether it was worth paying my attorney to get the remaining balance of $5,100. The attorney himself talked me out of it because he said it wouldn't be worth it in the long run. He offered to write a letter and I decided to stick with bugging them for a couple more months. I figured if I couldn't get a response in two months, I would try the attorney's letter and, failing that, I would simply give up and move on. Maybe I'm overly patient.

    After the second threatening-yet-professional letter and 6 weeks time, I receive a payment for $3,000. They also included a letter saying that they were "sorry for the whole mess and we will try to make it up to you". I'm not holding my breath. I wrote back to thank them for the partial payment and included an invoice for the remaining balance of $2,100. That's the last letter/invoice I'm going to send and I don't expect to ever see the balance.

    I have moved on to bigger and better things and have learned a valuable lesson from all this: include a payment plan in the contract! Now for larger projects such as this, I require a 15% retainer; at the project's 50% completion stage (usually the end of the design phase), I bill up to that point and expect payment or a promise of payment before continuing; delivery of the FIRST DRAFT of the final product includes an invoice for the remaining balance; the FINAL product is not delivered until I receive the balance. Not one client has had a problem with this so far... repeat customers often send me a check for the proposal amount before I even start work! I think I have found the best process I could hope for.

    Thanks to all for your comments and suggestions -- and especially Lochie, for your continued interest!

  15. #15
    Join Date
    Jul 2001
    Location
    .INdiana
    Posts
    2,465
    you're still hosting them?

  16. #16
    Join Date
    Mar 2004
    Location
    New Zealand
    Posts
    532
    Dyna: Why don't you just pass the invoice off to a debt collector.

    If you're done working for them, and you don't expect to see the money, then you have nothing to lose - debt collectors don't generally charge you, they just take a cut of the collected money if they manage to collect it. You can't let clients decide when or if they will pay.

  17. #17
    Join Date
    Aug 2002
    Location
    Bharat
    Posts
    4,808
    Whether still hosting them or not Dyna is doing the right thing, specially when there had been a long wonderful relationship involved.

    You can see that the client paid $3000/- and said sorry too, there could be many reasons, why they didn't paid earlier, and there is a possibility that they may pay the balance without going through a debt collector or attorney.

    This way at least both the parties will continue having good relations, the client (who had been paying good amount for the services and had been a source of consistent income), may come back paying balance and may both the parties involved continue working together with new contract in place.
    Vinsar.Net - Quality Web Hosting at Economical Price on USA & European Servers
    Offering domains, shared, reseller & VPS hosting.
    Reliable Domain Reseller Account Resell Domains with Confidence

  18. #18
    Join Date
    May 2004
    Location
    Central Scotland
    Posts
    245
    DynaWerx, You're levelheaded-ness has got you $3,000 that I'll guarantee most viewers of this thread would have thought you would never see. You're living proof that the powerful on off switch should ALWAYS be a last resort. I have to say, you dealt with this matter in a very professional manner, stuck to your guns, and it's obviously taken you to the point of improving your business, can that ever be a bad thing?

    Congratulations, you really done well on this. And don't thank me for my interest, this is a community, it's what we are all here for

    PS: What ever you do, don't listen to people that tell you to go to the debt collector. If you can wait for your $2,100, then wait. If you go down the debt collection route now you could lose the chance of oever getting another cent from that customer. Yes I was the one that originally mentioned debt collection agencies, but at that time there was very little hope, and they wrote you a letter saying they were weighing up how much you were actually were worth. They have now apologised... light at the end of the tunnel, you just need to keep walking for a while mate.
    Last edited by lochie; 05-26-2007 at 04:18 AM.
    WKD Banners | Make the most of your advertising!
    Designing banners since 2004 | Visit our Website www.wkdbanners.com

  19. #19
    Join Date
    Jul 2003
    Location
    Bracknell
    Posts
    11
    I'd say the webhosting and web design contracts are 2 different contracts. If one of the contracts (web design) is violated due to non-payment, this doesn't give you the right to suspend the services (webhosting) in the other contract. Only if there are no contracts (and no general terms and conditions) for any of the 2 services, you could argue that it's part of the same contract, but it depends of the type of billing: were both services billed on 1 invoice? Did the payment mention the invoice number correctly?
    If a customer pays without mentioning an invoice number, you can use this payment for the oldest invoice, regardless of what the payment was meant for. In this case the more recent invoice for webhosting would still be unpaid.
    But if they protest your invoice for webdesign services and correctly paid the other invoice, it's up to the judge do decide about the web design invoice, and you can't cancel their webhosting service. Of course you can terminate the contract for webhosting early (depending on what the notice period is). But you are required to offer the service for the period that you sent an invoice that was paid by them.

  20. #20
    Join Date
    Aug 2003
    Location
    East Coast
    Posts
    2,082
    I disagree with some of the posts here, I think that you are providing them NET Terms, As such they are paying into net terms and you can with hold whatever you want if they do not pay accordingly.

    Of course it's all a matter of how the hosting deal was constructed with regards to the design contract.
    Last edited by Dave W; 05-29-2007 at 04:18 PM. Reason: lazy fingers today

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •