Tech agency need to exit contract with problem client

by wackajala. Posted on Sep 16, 2020    5    8

Hi all - wondering if you all can act as a sounding board for me on a contract issue with a customer.

I run a tech agency and have a client I want to terminate. There is a one month contract of which roughly half of the work was performed. The client paid 5k up front and delivery would result in a second and final payment of an additional 5k.

The reason for the desire to terminate is simply because I can see the client is becoming a real pain to work with, looking to wrangle the maximum amount of work out of the relationship even if it’s beyond the scope of the contract or within interpretation but clearly beyond the spirit of the contract, and finding ways to show how we are not doing the job well in an effort to manipulate us even though the work quality so far is absolutely great. classic dream client!

I would rather accept a loss and move on rather than spend what would likely turn into an additional 3-4 weeks of work listening to how we are not doing enough even though we are doing quite a bit more than the spirit of the contract already. I am aware of the legal side such as breach of contract.

My question is on the negotiation side of exiting immediately. I was thinking to state something like:

Option A: transfer of all assets immediately including extras like install documentation etc. both parties agree no further payment will be made.

Option B: return the $5k and I do not transfer the work.

I don’t see the individual being able to claim any damages as this is a startup with a first time build and they don’t have any business yet. Would not put it beyond this individual however to come up with something. Ideally would like to be stern but fair.

Thoughts? How would you handle?

Thanks a lot all. Appreciate your response in advance.


bncer_ss 1

Understand you, man. We have been in similar situation. Solved as usual: added additional cost to the budget.
Another option I can offer to catch up to move the project to my agency. Of course considering the stack.

thisbondisaaarated 2

Look at Mr.Salesman right here, haha

Re-Infected 1

There should be clear terms in your contract regarding this matter.

inscrutablemike 2

Does the original contract have a termination clause?

For such a short engagement, I would have (in a past life) set it up as a series of week-long engagements, with "acceptance" defined as agreeing to continue to the next week. Even so, the termination of the contract would be specified as occurring under certain specific circumstances (x notifies y in writing, client pays all outstanding fees up to period of termination, etc.). If you didn't write a termination clause into the contract then you're essentially at the client's mercy - for the term of the contract.

If you really want to end the contract and make the client go away, you can negotiate with them to return the original $5k payment. You don't have to be specific about why and it's probably better if you're not. You can't continue the project and you want to return the original payment may well be enough. But if they bite - get the agreement *in writing* and *get a receipt* for the return of payment. Keep these filed along with your copy of the original agreement.

I *would not* transfer original assets to them if you're returning the only payment. There's only downside to it, because the only use they could have for the unfinished assets are as evidence in a suit for damages. No matter what the reality, trying to explain the unfinished assets will be a hard sell to a random jury of your "peers", if it comes to that.

Hollacaine 3

They could possibly have damages for a delay in the project. Clients like this are going to happen. You could benefit by learning to handle them (or learn the signs to try and avoid them in the first place if possible).

Consider having a discussion where you re-state exactly what was agreed and what will be done. If the client cannot agree to a reasonable delivery of the project then you breach the two options you listed. Then you have the argument that you tried to find a solution and they can circle back to that if the other 2 are untenable.

  wackajala 1

Thank you.

calemedia 3

I think giving him both options seems fair

noodlez 12

Option C: You create an extremely clear cut deliverable list and rigid timetable to close out the project in a way that satisfies the contract. Be extremely specific, and don't allow any overruns, or charge hourly for them. Require it be signed as an addendum to the contract.

Present all options to them and let them pick.