Hello.
Happy Monday and welcome to episode number five of the You Can’t Be Serious (YCBS!) legal podcast.
I’m Bradley Bailyn, a business attorney here in New York City. And today, we’re going to talk about getting paid for more of the work that you do.
I frequently help clients who are struggling and in turnaround situations. And one of the most important things we need to do is redraft their contracts so that they’re not stuck doing work for people who are not paying. What happens in the real world is you’re all excited to get into the relationship. The other person is excited… that is, your client. Everybody’s happy. You start doing the work. They make the down payment and then their payments start getting slower and slower and slower and their demands on you start getting higher and higher and higher.
And basically, they’re making you uncomfortable being strict about getting paid because of the issues and complaints that they’ve raised. You made a small mistake and they capitalized on it to the maximum extent possible bellyaching about the problems you gave them and how they would never ask you for a credit, but they just want you to know how gracious they’re being.
And, you know, these are problems. These are symptoms of a company having financial problems, not just you, but your potential client.
So the best way to deal with this is if you have a default clause in your contract, the default clause is going to say there are payment terms here. They need to maybe make the first payment down as a security deposit along with the last month’s payment. And they need to make each month’s payment before you begin work for the next month. When you hit one milestone, they need to pay for the next milestone, whatever it may be.
And when they don’t make those payments, they trigger the default clause, which your legal department, your boss, whatever you want to say requires you to strictly stick to. So the default clause is going to say,
- You stop work when they don’t pay.
- There’s interest if they don’t pay on time and
- After enough time has passed, then they owe you a certain amount of money to represent your losses on the whole job.
For example, they don’t pay for 90 days. OK. At this point, it seems pretty clear that they have no intention to pay at all.
And so if you have 50 thousand dollars in unpaid payments left in the contract, then maybe at this point they need to just make a twenty five thousand dollar payment in lieu of the contract, and you then have the right to sue them for not making that payment.
And collections is going to be a subject for a future video. But without that default clause, it gets very difficult because they’ll be like, well, the contract says this. The contract says that. You didn’t really do everything the way it should have been done. You need to have a little bit more clemency. We’re talking to your competitors. We may just go with a competitor that offers a cheaper price.
Listen, there’s nothing I can do. We have these clauses. Our legal department requires that we stick to it. And that’s pretty much that.
So if you’d like me to take a look at your contracts and make sure they’re structured appropriately and make sure that you’ve got good payment terms in there and delivery terms in there and a solid, workable default clause that’s going to give you some leverage in the event that they want to go with a competitor or they’re having financial trouble or you just need an advantage over other similarly situated vendors trying to get paid.
Or if you have questions that you’d like me to deal with on a future podcast, then please just give me a call. Or you can text me or email brad@bailynlaw.com.
If you have the ability to subscribe to this podcast because there’s a subscribe button on whatever platform you’re watching or listening to it on, I think it would probably be a pretty good idea because the tips and tricks that I give I believe are original and valuable and you may not hear it anywhere else. Thank you for taking the time to watch or listen, and have a great day.
