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Termination of Flat Fee Contract Billing Issue
Old 08-10-2015, 03:25 PM   #1
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Termination of Flat Fee Contract Billing Issue

I think I know the answer, however, after getting nowhere on an internet search, I thought I'd ask here.

We signed a contract with an interior designer for design including detailed drawing for contractor as well as planning dept, assistance in product selection, and contractor liaison for our upcoming remodel of our master bath and laundry room. Due to various issues, I have decided to terminate the contract. We have no final design on the master bath, have done some product selection. Just started on the laundry room design and have the first cut to start discussion.

We are located in California. Contract is flat fee, no cancellation terms, no milestone billing (in fact billing is not addressed other than to say 'excess' work to be billed at $X/hr), termination is not addressed.

My position is that the fees should relate to the portion of the work completed as contracted for, in essence, milestone type billing. Hers is that they have billed for work performed. I asked and she stated that once the hourly billing bumps up to flat fee, any additional work done would not be billed. We have paid 55% of flat fee to date and there is an outstanding invoice which would bring billing to date to 72%. If we pay her the additional amount it will be well north of 72% for work to be done.

Do I have a leg to stand on? Or are we stuck paying the additional amount and getting zip. If I provide her with a final design, she'll bill us additional for the drawings .
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Old 08-10-2015, 05:57 PM   #2
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You always have a leg to stand on if you have not paid... however, if they take you to small claims I think you lose....


Why? You breached the contract... unless termination was addressed, I would think that you would owe 100% of the contract...


Some legal expert hopefully will come by and tell us the truth...


Edit to add.... I think that you would not have to pay any additional fee since the drawings were addressed in the flat fee... if she tried to bill you, I think she does not have a leg to stand on...
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Old 08-10-2015, 06:57 PM   #3
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All contracts need to have termination provisions to avoid the exact situation you find yourself in. While it's true that she could take you to small claims, my guess is that if you come up with a reasonable compromise she will accept and move on.

You don't state the reason you want to terminate. If it's just a personality conflict, or you don't care for the choices she is making, that doesn't give you much to work with. If you believe she breached her duties, you may have something more to go on.

Given that you've already paid out most of the contract, is it worth reconsidering letting her just finish?
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Old 08-10-2015, 08:46 PM   #4
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Why would you pay any additional amount? Tell her no then she needs to take you to court for the remainder. If she didn't complete the contract then IMO it is unlikely that the judge will require you to pay the remainder since the contract is so flawed.

If billing/payment is not addressed in the contract, then I think it is reasonable for you to claim that the billing was intended to be commensurate with the completion of the work so if less than 55% of the work is done then you owe nothing more. I suppose that the designer could unilaterally complete everything and demand payment of the remaining contract amount but I doubt they would do it when they know it is unlikely that they get paid unless they take you to court.

Some of the answer might be with why you are terminating the contract. If the reason is that they work was not acceptable or untimely or had significant errors or such then you may have grounds for refusing to continue. If it is that you just changed you mind and decided to do it yourself then you wouldn't have much of a leg to stand on.
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Old 08-10-2015, 10:47 PM   #5
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Reason I have terminated is because, in no particular priority order, she simply doesn't listen to my needs/wants, is slow to respond (it took 5 e-mails and 1 phone call over 8 days to get some measurements so DH could build it out with suitcases, non-responsive to repeated requests for product sourcing so I could do some legwork, Title 24 requirements (her suggestion is oh, we'll just go in with what we want and let the planning dept tell us no...not acceptable to me). I could go on and on. Just remembered, her measurements on the master bath were off 10" x 10" and we had to go back to square one with some elements.

I have already hired another designer as I don't want to work with this one.

She stated she will look at billing to date and in the meantime, I will do some homework to determine what I think is reasonable given the work that has been performed to date.
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Old 08-10-2015, 11:15 PM   #6
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With what you say... I would claim that she breached the contract and would not pay any more...

Just say 'I will let the judge decide if you want to push' and leave it at that...


My first impression was you just decided to not do the job... you will have some pretty good 'proof' that she was not up to the job when you say 'I had to hire someone else at $X and had the whole thing done'.... clear that you did not breach....
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Old 08-11-2015, 10:40 AM   #7
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I might consider sending her a letter documenting all of these issues, and declaring her in breach of the contract. Demand compensation for the expenses you incurred hiring someone else to finish the job and demand a refund. She may agree to walk away without further demand for compensation than risk a judge ordering her to pay you damages.


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Old 08-11-2015, 10:50 AM   #8
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I might consider sending her a letter documenting all of these issues, and declaring her in breach of the contract. Demand compensation for the expenses you incurred hiring someone else to finish the job and demand a refund. She may agree to walk away without further demand for compensation than risk a judge ordering her to pay you damages.


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Old 08-11-2015, 11:11 AM   #9
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Sounds like breach of contract on the designer's end. She didn't perform. You're terminating. Might be some right to cure on her end, but I bet she'll be happy enough to accept partial payment for the percentage of the contracted work completed instead of going to small claims court given the lack of performance on her side.

I'd lay out the reasons why you are terminating her services in your email/letter to her.

If she's claiming she's used 72% of the contract dollar amount, she's probably charging you for rework due to her F ups on measuring stuff correctly the first time. You, the client, don't pay for rework - the consultant eats that cost. So maybe somewhere between 72% of the contract value and whatever the % complete based on your estimate of the milestones are is a fair number.

When I was a consultant engineer, I'd always break out the contract fee for milestones for exactly this reason. If I completed task 1, 2, 3, and 4 then half of 5 and the client cancelled at that point, then I'd collect 100% of tasks 1-4 and 50% of task 5 and not charge for tasks 6, 7, 8, etc. Done, happy client, happy me, happy boss of mine, and the client comes back later (assuming they didn't cancel for F up reasons but rather the project died on their end).
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Old 08-13-2015, 12:49 PM   #10
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Thank you for your comments. It appears that there's no clear cut answer which is what I was hoping for. I haven't heard from her since our telecon Monday morning. She has the action item of reviewing her billings to date and she knows my position that I feel she should be paid for work performed on a milestone type of basis for work completed to date.

Even though the contract was a flat fee, given that she is billing by the hour, she has to have some type of timecard system in place and if it comes to that I will demand to see hourly billing for work (detail) performed and expect to see hours at $0 for the rework due to her measuring errors.

I am willing to call it a day with $ paid to date.
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