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I've recently left university and this was one of my first freelance projects - the first one to become a nightmare. The project was to build a highly custom e-commerce system for a restaurant. However, being inexperienced, naive and stupid, we had a verbal contract, not a written one.

The client is currently withholding pay on the grounds that I have not completed the project. The problem is, what we agreed to on the day the project began is now only a shadow of what the project has actually become. I've graciously added many modules and features to the system free of charge, and he will not stop adding features saying that the project is not complete (even though all the features from the beginning of the project are present and then some). I think his main rationale is that his original idea did not suit his business, so he wants to keep changing it and that it is my responsibility to make it work.

To make matters worse, the client refused to give me a budget at the start of the project even after I asked several times to his face.

So, stupidly I decided to give him a massive discount hoping that he would agree to it at the completion of the project as he would not talk about price at the beginning.

However, when he received my invoice he said it was "too expensive", which shocked me and I couldn't sleep for several days. Btw this was just a few hundred bucks for a complex custom e-commerce system.

Yes I know I was stupid, but do I have any legal basis at all? Is there anything I can do in the court of law? Or is it in my best interest to cut the client loose, not do anything more for him and count my blessings?

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You should consult a lawyer, not a bunch of programmers! –  Oded Jan 5 '12 at 13:53
you are definitely not alone in this: "F**k you, Pay me" (Coarse language) –  Ken Li Jan 5 '12 at 13:56
I think it's a shame that this has three close votes already. While this sort of question is probably better suited to OnStartups there are some programmer specific aspects which make P.SX a good place for this question. –  Mark Booth Jan 5 '12 at 15:00
@MarkBooth - what aspects are specific to software development? I don't really see any. –  ChrisF Jan 5 '12 at 15:13
@ChrisF - People have an assumption that because it is easy to change software, they can change their requirements at the drop of a hat. You wouldn't expect a joiner to switch from making a 2ft wide window to making a 3ft wide window half way through the project. Some aspects are more general, hence providing links to OnStartups, but I think the answers here are valuable nevertheless. –  Mark Booth Jan 5 '12 at 15:24
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closed as off topic by Michael K, P.Brian.Mackey, JeffO, Yannis Rizos, David Thornley Jan 5 '12 at 15:17


5 Answers

Ouch, I feel your pain.

What you have here is not a billing problem, it is a sales problem. You need to ensure that when you make a sale that you are dealing with someone who will pay you. And of course to specify the scope of the work.

As for getting paid you can try but I would not think your odds are good. I would of course refuse to do anything at all more on it until you are paid (No matter how minor). If you have not delivered what you have done so far don't.

You may have to chalk this one up to "Stupid Tax" which I realize is painful.

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+1 for refusing to do anything more. –  Bernard Jan 5 '12 at 14:34
+1 for "stupid tax" I like this term. Also I completely agree with "scope". You have to define whats in scope but also as important is what is out of scope or to be deferred to another phase of the project when a new monetary agreement is worked out. –  Chris Jan 5 '12 at 14:52
I got the "Stupid Tax" term from Dave Ramsey, its his term for when he does something dumb that costs him money –  Zachary K Jan 5 '12 at 16:13
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You did not tell us where you are located, and laws and legal means vary from place to place. I would suggest that you do seek legal advice on the matter, because you may be able to do much better than you might imagine.

I do not know whether small claims courts exist where you are located, and whether they deal with cases of this kind, but unless you check, you will never know.

Also, another perceivable scenario is that you could obtain a court order (or something similar, perhaps just a legal notice) preventing the client from ever using the software that you wrote for him. He gives you no money, he gets no website, sounds fair. Then, you might be able to re-negotiate everything from the beginning, on equal grounds. (And if not, at least you won't feel so royally screwed.)

Seriously, give it a try.

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+1 on small claims court, but be careful because once you do this you open yourself up to a counter-suit. Discuss with a lawyer. Many give free consultations for period of time. –  maple_shaft Jan 5 '12 at 14:20
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well there is small claims court for things like this. Though you will be unlikely to get awarded more than what your invoice stated, but you can ask for more, and its even less likely that you will ever get any money anyway.

other things you should do are:

  • stop doing anything else until you get paid (obviously)
  • Take the site offline if you can and its online
  • try to ensure that your "customer" doesn't have access to any copies of your work

now you know to always get things in writing, and never to deliver until you get payed.

edit: One important thing I forgot to mention that you must do if you can't take the site down (and may actually be better than taking it down yourself), Issue a cease and desist letter. This will allow you to claim more than your invoice in damages if they don't comply with your letter, because they are now using your software illegally. Also do NOT do anything with a lawyer beyond a very basic consultation, and even then only if its free or very cheap, unless the amount you realistically expect you can claim in damages is significantly higher than the max limit to a small claims court in your area, you would just be wasting a lot of your time time for a huge winfall for the lawyer if you let him take your case to court .

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+1 for getting things in writing. –  Bernard Jan 5 '12 at 14:35
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If your invoice is for just a few hundred bucks then it is unlikely that contacting a lawyer would be cost effective.

If you live somewhere that has a small claims court then that may be one option, but this could still cost you more in your time than you could earn in that time on another contract.

Be careful of taking their site off-line if it is already up and running. That could lead you to be sued by your customer, as you don't have an explicit clause in you contract that removal of service would result from non-payment (since you only have a verbal contract).

For me, I would only accept a fixed price contract if the scope of the project was fixed. If the scope of the project was flexible, I would expect to be paid on a time and materials (or Cost plus) basis.

I second the suggestion to Stop working for him immediately. Also consider requiring this client to pre-pay for any future work, even if he does pay up now.

The last contract I worked on, I required 40 hour blocks of time to be purchased in advance. To finish the project off I worked over the last 40 hour block, which was a mistake. Predictably the client has never got around to paying my final invoice.

As Zachary suggests, you may be better off just chalking this one up to experience, as I did.

Finally, you may find the following OnStartups questions useful:

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Everybody here has good ideas. I would like to add a few:

  1. Talk to a lawyer, there are a lot of good law firms that give free consultation and legal advice for new customers. It doesn't hurt to ask.

  2. Stop working for him immediately. Depending on what the lawyer says, see if you can take the site down too, you don't want him to benefit from your hard work until he pays for it. If the two of you did not sign any kind of agreement then you are likely okay to do this but PLEASE CONSULT THE LAWYER FIRST! The guy is clearly a clever con-artist who could have further dirty tricks up his sleave.

  3. Learn your lessons for next time. Never make a verbal agreement. Always have a signed contract. Play hardball and walk away if they don't like the price. Always introduce a "kill switch" of some kind that you can use as leverage if they don't fulfill their end of the contract, and make sure that it is stated in your rights within the contract that you have the right to terminate use of the software until their end of the bargain is fulfilled.

  4. Try to focus on the positive aspects of the experience. You got some valuable experience in software development that looks attractive on a resume and will help you land a good job.

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