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Partnership Gone bad - OR - I was taken

Discussion in 'Business & Corporate Matters' started by Rob C, Mar 31, 2021.

  1. Rob C

    Rob C Law Topic Starter New Member

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    I run a small industrial machine design and building business, focusing on the mechanical aspects of the equipment. I was contacted about a year ago (through a former co-worker) by a machine controls business who wanted to expand into industrial robotics, a field in which I have experience, and they do not.


    They had one particular client that they asked me to help design a solution for (using a robot to palletize boxes coming off their packaging line, pretty standard stuff)). I helped then extensively with this, doing, I believe, the majority of the background and engineering work and handing it off to their salesman.


    Over the course of the year, the job expanded to replacing most of their packaging line, and again I did all the planning, layout, and engineering work, and handed it off to their salesman for presentation to the client. My work products were used extensively in this effort and early this year we were awarded the job.


    In the meantime, they asked me to assist with the design and mechanical aspects of several other robotic projects that they were trying to get. I was happy to do this as I was repeatedly assured that I would be doing all the mechanical parts of these jobs from this partnership. This amounts to a couple hundred hours of engineering work over the last year.


    A few weeks ago we had a planning meeting about this project wherein they announced that they wanted to save money on this project by not testing any of the equipment before installing it on the customer’s floor. In this industry, something like this is just not done; you ALWAYS test before you put it in front of the customer especially a project as complex as this. I objected and said they were creating tremendous risk, but they said they could save a lot of money by not testing. So, their customer, their decision… I left it at that.

    The following week I was supposed to go with their salesman to one of their existing customers to look at a machine that needed a rebuild. This was mysteriously cancelled, which I didn't think much of at the time.

    Fast forward a week, so about a week before the first invoice for my services was due, I received a derogatory text, questioning my integrity concerning the no-testing decision, from their salesman that was intended for one of the partners. The salesman visited my shop the next afternoon ostensibly to apologize, but instead arguing, vigorously, that the text was somehow not derogatory, and was just taken out of context. I asked him to send me the exculpatory context texts and he said absolutely that he would.

    The owner of the other company called the next morning demanding to have a meeting and I declined until either he, or his employee, fulfilled the obligation and sent me the context, as I could not speak on even footing without all the relevant facts. He then emailed a threat to cancel the entire relationship unless I called him immediately, to which I replied that I would be happy to meet with him after I (you guessed it) read the context.


    Later that afternoon (this was a friday) the owner of the other company and I agreed to meet at my office on Monday to discuss this, (by this point, he would have had time to delete anything damaging, so by then the texts were moot.) but I received an email Sunday morning indicating that they were ending the relationship immediately, citing my (supposed) willingness to walk away from the project over seeing some texts


    For a sense of scale, I approximate their overall sale on this job was about $8 or $900,000, of which close to $200,000 was my work, $300,000 was cost of OEM equipment, and $3, to $400,000 was their profit. - My estimate only as I was not privy to their final quotations, but I did specify and price nearly all the equipment going into the project.


    So the question is; is there an avenue to recover compensation for my work on this particular project - and/or compensation for all the work done on all their other projects? They have not said so in writing, but they made it clear they have no intention of paying for anything I’ve done.

    Complicating matter:
    They subcontracted one small machine rebuild job to me 2 months ago. The job is currently about 90% done. They want the machine back immediately and have indicated (verbally) that they will not pay the remaining 50% owed on the rebuild (about $3,500).
    Their first payment went over 30 days past due, and it was not until I mentioned that their job was on credit hold pending payment that they finally sent the down payment. This is the only billing history I have with them.

    Can I insist on COD payment for the machine? If there is no promising legal recourse, can I bill them for any of my professional services on the the robot projects I did for them?
     
  2. adjusterjack

    adjusterjack Super Moderator

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    You can insist. You can bill. You can stand on your head and spit wooden nickels. If you still don't get paid, then what?

    Do you have a written contract with those people specifying your fees and how and when you get paid?

    I think your situation is more complicated than any strangers on the internet can help with. You are probably going to have to sue for your money. Consult an attorney and review your options.
     
  3. Rob C

    Rob C Law Topic Starter New Member

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    Thanks for your reply!

    No written contract (Hindsight, I know)

    I've contacted two attorneys so far and they both said, more or less, that's a complicated case and we're really busy right now. I'm going to be speaking with another office this afternoon, but I'm not optimistic.

    The most immediate question is this: I have one of their (customer's) machines in my shop. They want it back and have said they do not intend to pay the remaining 50% of the PO. (their PO had no terms, my quote did, so I believe my terms prevail). Can I hold their machine while I await payment?

    Getting past this part should hopefully buy me enough time to fine a lawyer that will take the case.
     
  4. Zigner

    Zigner Well-Known Member

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    I wouldn't ship a project that I had not been paid for.

    Of course you can send them a bill. Whether they are obligated to pay it or not depends on the terms of any agreement(s) you may have had with them.
     
  5. Rob C

    Rob C Law Topic Starter New Member

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    What about holding up this project until they pay the engineering invoices as well?
     
  6. Zigner

    Zigner Well-Known Member

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    I'm not comfortable even commenting on that. You should speak to a local attorney.
     
  7. adjusterjack

    adjusterjack Super Moderator

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    There are many laws (common and statutory) addressing that issue with regard to auto repair shops, towing companies, contractors, moving companies, landlords, etc.

    The trend that I have noticed is away from allowing the holding of somebody's property hostage for payment. Whether that applies to you, or not, I cannot say.

    Your lawyer should be able to figure that out rather quickly.
     
  8. army judge

    army judge Super Moderator

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    Holding SOMETHING hostage that belongs to "Bibby" in an effort to force "Bibby" into paying you money that you ALLEGE she owes you is a very risky endeavor.

    At best, "Bibby" brings a civil lawsuit against you seeking the return of her property.

    At worst, you might find yourself facing a criminal charge.

    I suggest you retain an attorney to extricate you and your business from the "bear" trap you created.
     
  9. MosheStrugano

    MosheStrugano New Member

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    Its important to have a written contract with those people that are specifying your charges
     
  10. Rob C

    Rob C Law Topic Starter New Member

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    OK, so I've spoken to an attorney - and I have a second opinion scheduled for early next week - this is the reader's digest version...

    1. If the other party is willing to pay for the machine, I cannot hold onto it, regardless of whatever else they may owe me. I can demand COD, but other than that, if they pay, it goes.

    2. I should have had all parties sign an agreement at the onset, but hey, we all knew that.

    3. Early on in the process, I sent them an estimate of what the first project would cost. That document included my hourly rate for a number of items listed. From that point on, anything they ask me to do - knowing my hourly rate - constituted an implicit contract, and is recoverable. As the lawyer put it, once they have my hourly rate, and they continue asking me to do work for them, they have reasonable expectation that they will have to pay for that work.

    4. This would have been easier with a written agreement.
     
  11. army judge

    army judge Super Moderator

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    The four items enumerated above seem to mirror the information offered by some of this site's responders/participants hereinabove.
     

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