Taking a business to court of none payment of commission

barryd999

Hi. I don’t know if this is the right forum or even the right site for this post but any help will be very much appreciated.

I have been a self employed IT engineer for 12 years and have worked with several companies where we receive a commission for selling their products.

In 2009 I signed an agreement to sell an online backup system to my customers with what I thought was a reputable company who paid me a regular commission for each service I sold to a customer for as long as they had it.

Times are tough and we have lost a lot of business due to firms going under or just not spending. To make matters worse the company I had the commission agreement with has decided to "invent" a new rule where they will stop paying commission to resellers who have not brought any new business in the last year.

They are still getting paid by my clients the same amount so are pocketing all the money for themselves. Their excuse? Times are hard for them as well!

Surely this cannot be legal as I have signed an ongoing agreement. I have a similar arrangement with an Internet Service Provider where we are still receiving small commissions for clients we signed up for broadband ten years ago!

Luckily it’s not a lot of money but right now it’s all I need. They tell me if I bring in one new customer they will re-instate the commission. I no longer wish to use them as I feel they have been underhand and played dirty to be honest. It probably isn’t worth taking them to court for as it’s less than £1000 a year but is there anything I can do.

My thoughts were as the end users are my customers to find another provider and start to move my customers across to them even if they don’t pay a commission. Then nobody wins. I have threatened both legal action and moving my client’s services elsewhere but they are calling my bluff I think.

I can’t really afford to bring in a solicitor as it’s not worth it and my company is on its last legs. Any advice gratefully appreciated or indeed if this isn’t the right forum is there a business advice forum that I might ask the questions on?

Thanks

ChampionBob

It’s not nice when this sort of thing happens.

Whether the company can legally do this will depend on the contract you have / had with them. Lots of contracts contain a clause that gives one party (normally the commission payer) the right to vary the terms of the contract by giving the other party (you) so many day’s notice (normally a minimum of 30 days).

There should also be an explicit clause that explains ALL of the circumstances which would result in them stopping paying commission.

If a condition to vary the contract exists in your contract or your situation is covered under the terms of stopping payments then, unfortunately they can do this.

However if neither of these conditions exist, you have a case. In this situation you should first write to them asking them to identify the part of your contract they are relying on to stop paying you. If they can’t (or they won’t engage with you) then you can pursue this through the courts.

Mistral001

No matter what happens, I would not deal with this company again. Even if you do get a potential customer do not refer them to this company. By dealing with this comapany again you are colluding in their dishonest (but legal) business practices.

You can sue. That is up to you and you probably will win. And if you win they might pay up. Whatever happens do not deal with them again.

terra_ferma

Would small claims court be appropriate? that would not cost you a lot of money. Just the threat like a 'letter before action' may be enough to show you are serious about it.
Thank is of course if they contract doesn't have a clause allowing them to do it that cannot be considered 'unfair'

barryd999

Thanks very much for the replies. I will go through the contracts again but I have read them and have seen no such clause that would allow them to do this.

Their company name changed recently so I am not sure if they have had some kind of shake up or take over as they were always great to deal with in the past until now.

I will maybe write them a formal letter as mentioned asking them to detail where it states in the contract that they can do this and then look at the small claims court.

I have always prided myself in being an honest Joe and have surrounded myself with similar providers and strived to give our small number of clients a quality trustworthy and reliable service. It just gets my goat when companies start behaving like this. There is a principle here and I am deeply angry about it. I bet its happening more and more though as companies have their backs to the wall and try all sorts of dirty tricks to save and make more money.

I would rather go bust than behave like that.

Thanks again.

Mistral001

barryd999 wrote: »

Their company name changed recently

Are you actually dealing with a new company now.

barryd999

Mistral001 wrote: »

Are you actually dealing with a new company now.

I dont think so. They changed their name some time ago but we have received commissions for some time in the past under the new name.

This did happen once before with an ISP that was taken over and they tried to wriggle out of paying us. This was a substantial amount though. They owed us about £12000 in back payment commissions and refused to pay as they were a new company and didnt have an arrangement with us. I fought them for about 8 months (without lawyers I might add) and eventually got them to cough up. I then moved the majority of the customer base to another provider.

I dont think its the case with this company. They just rebranded. Anyway I have past evidence of them paying us regularly under this new company name.

Thanks again

ChampionBob

If they rebranded or were taken over, I don’t think it matters.

Whoever they are now, they originally were happy to be bound by the contract therefore they cannot change or alter it now (I don’t think) unless the contract explicitly allows them to.

barryd999

Ok thanks

I will go through the small print again and report back

patman99

Could you not switch your customers to a new online backup system ?. There must be other companies out there who supply commercial-grade online backup solutions that would be willing to pay you per head for every customer you switch?.

Would certainly send a message to the company who's products you have sold up to now.

barryd999

patman99 wrote: »

Could you not switch your customers to a new online backup system ?. There must be other companies out there who supply commercial-grade online backup solutions that would be willing to pay you per head for every customer you switch?.

Would certainly send a message to the company who's products you have sold up to now.

Yes this is an option that I am looking at and was about to do this. However it appears as if my efforts with your help have paid off. I have been through the agreements, had my solicitor look at them and written to them asking them to point out where it states they can suddenly change the goal posts (they cant by the way).

I think its paid off. I had an email this morning stating that they have agreed to re-instate our commission! Ill believe it when I see it but I guess an email is as good as having it in writing. Thanks ever so much for your advice and input. A good result for MSE I think!