Customer owes money and won't pay

[lanikita]

We have a client that we did custom graphic design and web design work for. We included a scope of the project spelling out exactly what was included for the price and stated that anything extra that the client wanted that went above and beyond the scope of the project would be billed at our hourly rate of $ 65. This was included in the contract. The client kept on adding things that were above and beyond and the total ended up being nearly $3,000 more. He did not want to pay the entire amount and wanted to do a partial trade where he paid us $1,700 in cash and wanted to give us $1,300 worth of the product he sells. We agreed, but the product was still in production at the time. Now 3 months later, we have not received the agreed upon $1,300 worth of product and he told us today he will not give it to us. He is stating that the design work we did was not right, but he approved everything including all the final drafts.

This client has been nothing but trouble and has been difficult and demanding from the beginning. It took nearly 2 months to get our contract back.

After being patient for several months waiting for the product to be produced, we asked where our product was today. He said he won't give it to us. Now he is threatening to sue us because his total is more than the original bid, but only because he kept adding more work on a daily basis for months. How can this be possible?

We went above and beyond throwing in 14 hours of free work, and gave him a discount to begin with of nearly $ 500. We also contacted his production company that he outsources with to see if things were working fine.

We have documentation and hours logged for all additional work and correspondence through email with him, which we can print out.

What can we do to get the $ 1,300 he owes us?? Please help.

 

[jmacgregor]

Though I am not a lawyer, I may be able to help to some extent, as I am fairly knowledgeable of your line of work and contractual agreements to boot. Additional information from your end would be useful, but I'll do my best on what I have.

First, what kind of agreement or contract did you make with this client? Was it written or verbal? Does the agreement include or disclaim warranties, representations and indemnities on your behalf as the designer? Does the client make any warranties, representations and indemnities as to the materials the client provided to you as the designer?

To me, it sounds like your client is in breach of his contract, but what constitutes a "breach" of the agreement? I can almost guarantee the contract you agreed upon did not define that term, leaving it unclear as to whether or not it is in fact a breach, a claim of breach, who determines and what constitutes a breach etc. This is important because your rights are tied into the term "breach".

Many graphic designers ans artists have developed a body of knowledge and perhaps written and other materials which they claim (rightly or wrongly) proprietary rights. The same may be true of the client. Thus the scope of each party's claims should be set out in detail. Further, how are these ownership interests to be reconciled when the designer produces art and/or a physical product for the client using both the designer's body of work and the tangible or intangible materials provided by the designer? This is very common in commercial packaging-type companies where the designer's work is printed on the client's material ultimately catering to a third party. Which party "owns" that work product and what can that party do (or not do) with those rights of ownership? In this regard, there may be state or federal laws that govern these and related issues and the effect of these laws should be factored into this area of the agreement.

The reality is that many agreements, especially in the service industry, do not run a smooth course for their entire duration and disputes often arise. In my own experience the contract itself was so poorly made, disputes and misunderstandings were almost inevitable…an attempt to "save" money by the client turned out to be enormously more expensive. What are these provisions and how is an act of "default" defined? The answer to this was already stated above in regards to "breach".

Remember that if a contract is a problem for one side, it is also a problem for the other side. If one side is not happy, that side will seek to delay, excuse its performance or, in the worst case, file civil lawsuits to get out, enforce payment etc. And if that happens, the other side has an equal set of problems.

I hope this is of some use to you. If your customer is acting in the manner in which you describe, I would highly recommend consulting a lawyer and following the advice of a professional.

Best of luck,
jM

 

[Michael Wechsler]

Nail him in small claims court. You should request punitive damages unless he is able to show how you didn't do a proper job. If he approved the final work then he has no defense.

Additionally, if it were me, I would send him a certified letter with the above and state that as he has not paid you on the contract, he does not have a license to use your materials that you created. Accordingly, you will speak to an attorney and have a letter sent to his web site host, as per the DMCA (Digital Millenium Copyright Act) stating that he is violating the copyright in the works that he has placed online. You do have the contract within which it identifies the graphics that you created and the fact is that he did not pay. He may have custody of a copy of the graphics but not necessarily a license or ownership of them to use until he has paid.

 

[lanikita]

Thank you for your advice!

The contract was written for the graphic & web design. It was a verbal agreement that he would give us the product valued at $1,300.00. I have the original invoice I faxed him for the full amount due, then a copy of the adjusted invoice taking off $ 1,300.00.

When I send him the certified letter should I give him a date to make payment of the $1,300 by? I would rather have him pay than go through the hassle of a lawsuit. Although, he is an idiot and can see him wanting to put up a fight.

Is it in our best interest to hire an attorney? How much would an attorney charge for a case like this? It seems like if you are going to hire an attorney in this case then seeking punitive damages would be a good idea too. This client has been at trade shows selling the product that we designed the graphics for. If punitive damages are sought, can we still go through small claims court?

Thanks

 

[lanikita]

Also, wondering if it is possible to stop him from continuing to produce the products using our design and displaying the product in advertisements, trades shows etc until he has paid?

Thanks

 

[Michael Wechsler]

An injunction could be costly. You may want to go to small claims court and ask for punitive damages. You may be able to get damages for every product he sells. You could really make his life hell by asking the court to help you with a subpoena for all of his records that relate to sale of any product or item that includes your logo. He won't be happy...

 

[lanikita]

appeal question

We took this client to small claims and were awarded the judgement, now he is appealing. I was wondering when we present our case the next time for the appeal will we (the plaintiff) present our case first or will the defendent (he's appealing) get to present his side first.

He also lost pretty bad the first time around and was really disrepectful in the courtroom loosing control and telling lies.

I feel like he is just appealing to prolong the process so he doesn't have to pay. Can we ask for more, since he is stalling when he doesn't really have a case and is just harassing us and wasting our time. Can we get compensated for missing work again.

 

[Michael Wechsler]

You can ask for punitive damages in the appeal if he has nothing to say and simply abusing the process. However, my understanding is that an appeal will not be heard if he cannot provide an adequate basis for the appeal.

 

[lanikita]

Will we get to present our side (opening statement first) since we are the plaintiffs?

How do we determine how much punitive damages to ask for? Or does the judge do this,if we say"we'd like to ask for punitve damages?"

Thank you.

 

[Michael Wechsler]

First the appeal may have to be granted to be heard. They need to present a reason why as a matter of law the case should have resulted differently. The burden of proof is on them to change the court's mind -- the court already decided that you were correct.

If there is an appeal heard, they get a chance to go first to explain why the result should be tossed out or modified. You are best to let them talk because they have to prove their case -- you can simply say they didn't prove it and if they didn't, that is sufficient. Otherwise, you should be prepared to rebut their reasons for the appeal at the hearing.

 

[lanikita]

I am in California. It seems like the small claims court gives the defendent the opportunity to appeal if they lose. All they have to do is fill out a form and pay there money (the form does not ask any questions as to why they are appealing). I got a notice in the mail that the defendent appealed and then the next day received the court date in the mail.

As far as the appeal being granted, does it seem like it has already been granted as described above? Or does he (defendent) have to give a statement in the courtroom as to why he is appealing and the judge decides if he wants to grant it based on what the defendent says.

It seems like in CA (according to a book I have read) that he (defendent) basically gets a new trial to prove his case again.

 

[Michael Wechsler]

The plaintiff has to prove his case. At the appeal, the defendant needs a good excuse why he should get a new trial. The burden of proof is on the DEFENDANT, not on you any more. If he has no excuse, you should ask the court for damages. I'm not sure what the court's jurisdiction is and whether it is limited to hearing the appeal and you might have to file another case again (ridiculous, I know) for the damages due to a frivolous appeal.