Do I have a contract? Contract for services - Sole trader issue

mlm1003

I work on an open ended contract for services basis as a sole trader, I recently left the company I was contracting to, they owed me £8k, and have decided not to pay me. 

I have a specific clause in my contract regarding the commission from a product I sell, it states I will repay commission if something cancels. There is another way other companies write this clause and I wouldn't have joined this company if they had written it the other way.

Now that I have left, they have gone back on their contract and are holding on to my earned money in case anyone cancels the product sold. I even have a voice note from when I began with them stating that if I left I would only be liable for cancellations.

I was working with this company via a third party, and the third party element finished in December, no other contract was put in place, but we have all continued as if we were working under the same terms and conditions. Etc paying me the same way. providing services in the same capacity. 

Therefore, do I have a contract?

DullGreyGuy

mlm1003 said:

I work on an open ended contract for services basis as a sole trader, I recently left the company I was contracting to, they owed me £8k, and have decided not to pay me. 

I have a specific clause in my contract regarding the commission from a product I sell, it states I will repay commission if something cancels. There is another way other companies write this clause and I wouldn't have joined this company if they had written it the other way.

Now that I have left, they have gone back on their contract and are holding on to my earned money in case anyone cancels the product sold. I even have a voice note from when I began with them stating that if I left I would only be liable for cancellations.

I was working with this company via a third party, and the third party element finished in December, no other contract was put in place, but we have all continued as if we were working under the same terms and conditions. Etc paying me the same way. providing services in the same capacity. 

Therefore, do I have a contract?

You have a contract, but what the contract states is another matter. 

Presumably you never had sight of the contract between the ultimate client and the middleman? 

What is the cancellation window for clients during which a clawback will occur? How long are they proposing to hold onto the final commission payment? 

mlm1003

DullGreyGuy said:

mlm1003 said:

I work on an open ended contract for services basis as a sole trader, I recently left the company I was contracting to, they owed me £8k, and have decided not to pay me. 

I have a specific clause in my contract regarding the commission from a product I sell, it states I will repay commission if something cancels. There is another way other companies write this clause and I wouldn't have joined this company if they had written it the other way.

Now that I have left, they have gone back on their contract and are holding on to my earned money in case anyone cancels the product sold. I even have a voice note from when I began with them stating that if I left I would only be liable for cancellations.

I was working with this company via a third party, and the third party element finished in December, no other contract was put in place, but we have all continued as if we were working under the same terms and conditions. Etc paying me the same way. providing services in the same capacity. 

Therefore, do I have a contract?

You have a contract, but what the contract states is another matter. 

Presumably you never had sight of the contract between the ultimate client and the middleman? 

What is the cancellation window for clients during which a clawback will occur? How long are they proposing to hold onto the final commission payment? 

Thanks for your reply. It wasn't a middle man as such. I'm in financial services, therefore it was a network contract - oversight and compliance - between me, the network and the principal of the firm I contracted to.

We changed from working under a network to directly authorised, so the network contract element ceased, but from what I'm reading the contract between me and the principal was not cancelled or amended to reflect the new directly authorised element.

The cancellation window is 4 years, they are proposing a 4 year hold on my income.

DullGreyGuy

So you previously had 2 contracts, one with the provider and one with the oversight? Or was it a tri-party contract between the three of you?

Did the moneys go direct from the provider to you or did it flow through the oversight to you?

Assuming the money was paid directly to you then I would point out whatever clauses there are in the contract you held with them that states they will pay you within X days of Y and invite them to point out whichever clause they are reliant on for withholding funds. 

Its not that uncommon for their to be a withheld pot in a B2B contract but generally it would be based on a rate (eg 20% of customers cancel) rather than the whole lot. 

mlm1003

DullGreyGuy said:

So you previously had 2 contracts, one with the provider and one with the oversight? Or was it a tri-party contract between the three of you?

Did the moneys go direct from the provider to you or did it flow through the oversight to you?

Assuming the money was paid directly to you then I would point out whatever clauses there are in the contract you held with them that states they will pay you within X days of Y and invite them to point out whichever clause they are reliant on for withholding funds. 

Its not that uncommon for their to be a withheld pot in a B2B contract but generally it would be based on a rate (eg 20% of customers cancel) rather than the whole lot. 

Thanks - no one contract - it should have been 2, but the principal didn't send one for me to sign, and the same terms and conditions were in the first contract, it is a tri party contract - if you meant its signed by all 3 of us.

I'm aware of the pot, they hold 15% back for this reason - although not written into contract - another little surprise when I started.

The money is paid to the principal and then me, as they take their payaway before paying me.

DullGreyGuy

mlm1003 said:

DullGreyGuy said:

So you previously had 2 contracts, one with the provider and one with the oversight? Or was it a tri-party contract between the three of you?

Did the moneys go direct from the provider to you or did it flow through the oversight to you?

Assuming the money was paid directly to you then I would point out whatever clauses there are in the contract you held with them that states they will pay you within X days of Y and invite them to point out whichever clause they are reliant on for withholding funds. 

Its not that uncommon for their to be a withheld pot in a B2B contract but generally it would be based on a rate (eg 20% of customers cancel) rather than the whole lot. 

Thanks - no one contract - it should have been 2, but the principal didn't send one for me to sign, and the same terms and conditions were in the first contract, it is a tri party contract - if you meant its signed by all 3 of us.

I'm aware of the pot, they hold 15% back for this reason - although not written into contract - another little surprise when I started.

The money is paid to the principal and then me, as they take their payaway before paying me.

Sorry, was referring to the setup before the network exited the relationship. 

A tri-party contract is where three entities are part of the same contract, I'd tend to look at the top of the contract where it normally starts by introducing the parties rather than the signature page as have seen bi-party contracts where a third party is asked to sign - eg when A buys services from B but B subcontracts some aspects to C, C isnt party to the contract so B is on the hook for the delivery but A wants C to sign anyway to show awareness even if there isnt direct liability. 

mlm1003

DullGreyGuy said:

mlm1003 said:

DullGreyGuy said:

So you previously had 2 contracts, one with the provider and one with the oversight? Or was it a tri-party contract between the three of you?

Did the moneys go direct from the provider to you or did it flow through the oversight to you?

Assuming the money was paid directly to you then I would point out whatever clauses there are in the contract you held with them that states they will pay you within X days of Y and invite them to point out whichever clause they are reliant on for withholding funds. 

Its not that uncommon for their to be a withheld pot in a B2B contract but generally it would be based on a rate (eg 20% of customers cancel) rather than the whole lot. 

Thanks - no one contract - it should have been 2, but the principal didn't send one for me to sign, and the same terms and conditions were in the first contract, it is a tri party contract - if you meant its signed by all 3 of us.

I'm aware of the pot, they hold 15% back for this reason - although not written into contract - another little surprise when I started.

The money is paid to the principal and then me, as they take their payaway before paying me.

Sorry, was referring to the setup before the network exited the relationship. 

A tri-party contract is where three entities are part of the same contract, I'd tend to look at the top of the contract where it normally starts by introducing the parties rather than the signature page as have seen bi-party contracts where a third party is asked to sign - eg when A buys services from B but B subcontracts some aspects to C, C isnt party to the contract so B is on the hook for the delivery but A wants C to sign anyway to show awareness even if there isnt direct liability. 

Its not a tri party contract - the principal should have put a separate contract in place, but didn't. I just read that part... I'm just wondering if we all acted as if there was a contract in place, does that mean anything?

DullGreyGuy

For a contract to exist, in England, there needs to be an offer to contract, acceptance and consideration (aka payment in most cases). A verbal contract is as binding as a written one but terms are much harder to prove what they were. 

It's in all parties' interest to have a written contract as it avoids nasty surprises at a later date, would suggest in future you dont operate without one. If the client doesn't have one then have your own you can give them to sign... the entity that drafts the contract generally ends up in the better place. Normally there is imbalances between parties and whoever is bigger will insist on theirs being used. 

They presumably will provide a copy of their standard terms which will have withholding and what happens on termination and state they never enter into any other form of agreement. 

mlm1003

DullGreyGuy said:

For a contract to exist, in England, there needs to be an offer to contract, acceptance and consideration (aka payment in most cases). A verbal contract is as binding as a written one but terms are much harder to prove what they were. 

It's in all parties' interest to have a written contract as it avoids nasty surprises at a later date, would suggest in future you dont operate without one. If the client doesn't have one then have your own you can give them to sign... the entity that drafts the contract generally ends up in the better place. Normally there is imbalances between parties and whoever is bigger will insist on theirs being used. 

They presumably will provide a copy of their standard terms which will have withholding and what happens on termination and state they never enter into any other form of agreement. 

Thanks for all your guidance. I don't want to waste money on lawyers to get to the same point you have, but I have whatsapp messages and voice notes confirming what happens if I leave, and then there is the intention of the offer and accept as they paid me per the terms of their contract. I have a lawyer who will look at the options for £200 per hour, but that will eat into what they owe me. Why do people have to be such a holes!

In terms of working without a contract - I know this, we all got very busy and it was forgotten about. They sent me an unsigned one so that I could review it before committing to working with them. They have then acted as if the contract is in place.

DullGreyGuy

If its unsigned its irrelevant, it was sent as the basis of the agreement and so would most likely be considered the terms given you started working for them and they paid you after receiving it. 

Lawyers are expensive, but it can be very expensive not to have one at times. I am no lawyer but have spent a lot of time reading contracts and dealing with them so generally will do my own reviews unless its a requirement of IR35 insurance for someone else to.