Contractual obligations (rant)

TJ Cornish

Graduate
Jan 13, 2011
1,263
1
0
St. Paul, MN
I've been working on a project for a while with a 3-way relationship - the "owner" who pays the bills, the "Application expert" who "knows what the owner needs/wants" (who is a friend of mine, competent, and a nice guy), and me - the "technical expert/implementer".

The project started when the owner asked the "application expert" ("AE" for the rest of the post) for help designing a fairly large scale outdoor sound system. The AE brought me in as a consultant, and I established a time and materials relationship with the owner. The owner is unable/unwilling to contribute to determining the project design goals, saying "The AE knows what I need - work with him" (the owner seems to be stuck thinking that "sound" is a utility like electricity or water and has a hard time grasping that there are about 11 zillion ways to do this with hugely varying costs and capabilities).

This situation proceeded reasonably well for a while, but the time allotted for the project implementation was not remotely sufficient for the system to be done by the first event. The AE and I promised to make the event happen using portable equipment, duct tape, and bailing wire if necessary to get the event done (which we did, and the event went fine), and then we would finish up after that. Throughout this process, and even during the first event, the design requirements have been slipperier than a greased pig, and seem to constantly change in material ways - programming/control/wiring, output routing, etc.

Making a long story short, I have proposed a contract to finish the project - specific design goals, specific labor responsibilities for both sides, for a specific fee. The owner is withholding a large payment to me for labor already performed (still on the T&M basis) until he gets a "system that's done and easy to use", at which time he proposes that he will pay me the T&M money (which he admits I'm owed) plus the contracted amount. I am unwilling to do any more work until my invoice is paid (duh).

The hilarious part of this is that he still won't commit to any design goals. He wants contractual payment - one check to be done with the project, but is unwilling/unable to discuss what I would actually be building. His standard of "complete, and easy to use" could be the most subjective thing in the universe, and I could be stuck working hours, days, or weeks until we eventually meander into what he would accept as "easy to use", for a fixed (and way too low for this hassle) fee.

Ultimately the owner will be the loser if this ends up going south. He has a large hardware investment in the project, and though I'm not remotely the only person in the world who can finish the job, I will surely be the cheapest by far, since anyone else coming in would have to reverse engineer what I've built, navigate the communication challenges with the owner, somehow figure out what the project end game actually is, possibly want to make changes to the design due to differing opinions/philosophies from what I chose, and then supply the labor to actually do the work.

I have some sympathy for the owner who clearly ended up way over his head in this (again based on his belief that sound is like water and you can just "stick a speaker there"), but that's the consequence of not being willing to be involved in setting the project requirements. There are some situations in life where you don't have to engage much - car is broken - bring to repair shop, write check, receive repaired vehicle. Others such as "build me a house", or "build me a complicated distributed sound system" don't work that way. When you totally defer all decisions to someone else, you also give up the right to criticize the decisions made. You can't say "I don't like what you did and I'm not paying you until you you make it the way I want it" after the fact, without having previously explained what it is you wanted, and having an agreement to perform that.

The AE (who is actually a volunteer) continues to attempt to explain to the owner that this isn't going to work. Hopefully we will succeed - I really hope I don't have to take this guy to court.
 
Re: Contractual obligations (rant)

TJ......

Figure out the most they could need and price out the gear and the hours. Now double it and add 50%. That ought to about do it.......

DR
 
Re: Contractual obligations (rant)

TJ......

Figure out the most they could need and price out the gear and the hours. Now double it and add 50%. That ought to about do it.......

DR
That's tempting. I am strongly considering withdrawing my contractual offer and only working T&M (assuming I ever get paid for what he already owes me). I've never fronted any hardware - I've put together a materials list, but all the purchasing has ben done by the owner/AE. I'm not the smartest guy in the world, but I am smart enough to avoid getting in the middle of several tens of thousands of dollars of hardware.
 
Re: Contractual obligations (rant)

Well the forum has eaten my answer twice and keeps logging me out, but ignoring the classic definiton for insanity I will keep trying and expect a different result (after deleting my old cookies- argh damn BB software and Safari BS).

Short answer... you need to figure out if you are general contractor or sub contractor, or employee, or what?

You and owner need to reach an agreement about what the finished project looks like, that can be confirmed by any objective 3rd party.

Owner should appreciate time value of money... if he wants to pay you later, he must pay you more for time value, and uncertainty you will ever be paid.

Good luck.

JR

PS: Lawyers would be much cheaper if we had time travel and could use them before the project started.
 
Re: Contractual obligations (rant)

I prefer to put a time limit on any written estimate I submit. They have until the date to accept it or it's a whole new ballgame. I'm pretty reasonable the first time around. After that it's strictly business. A boat for me, a fur coat for the Mrs...............
 
Re: Contractual obligations (rant)

Well the forum has eaten my answer twice and keeps logging me out, but ignoring the classic definiton for insanity I will keep trying and expect a different result (after deleting my old cookies- argh damn BB software and Safari BS).

Short answer... you need to figure out if you are general contractor or sub contractor, or employee, or what?

You and owner need to reach an agreement about what the finished project looks like, that can be confirmed by any objective 3rd party.

Owner should appreciate time value of money... if he wants to pay you later, he must pay you more for time value, and uncertainty you will ever be paid.

Good luck.

JR

PS: Lawyers would be much cheaper if we had time travel and could use them before the project started.
Our agreement is very simple - I am an hourly consultant. Period. I'm not the general contractor, a subcontractor, employee, or anything else in any capacity. He is free to fire me at any time (though he is obligated to pay me for whatever time I worked pre-firing, should he ever choose to fire me, which seems attractive sometimes), and other than my personal ethics, I am free to walk away from the project at any time.

I believe the other ace up my sleeve, should I ever need one, is that many items have not been constructed according to my design specifications, so this really is his system (his employees did 90% of the install work - my labor has pretty much been Visio drawings that get ignored, soldering, and DSP programming). I've tried to make it work the best I can, but this issue has contributed significantly to cost overruns, in addition to some compromises in the final performance of the system (towers pointing the wrong way, wrong height, amp racks 14' in the air accessable only by extension ladder, etc.)

If I can ever nail him down on specific design goals, we have a chance of saving the situation (assuming he pays me first).

I would be a little more hard nosed about this except for my relationship with the AE and the fact that effectively he and I are in this boat together. Other than my longstanding relationship with the AE and the assurances by both him and the owner that this will work out fine, I would never have accepted this arrangement, as I'm very aware of the perils of "dotted line" org charts.

It's easy to go on a forum and say "I would only accept a lawyered up, signed in blood, all the responsibility goes on the other party, payment in full in advance, batteries not included, etc." agreement (and I've said just that, I'm sure), but life is about relationships, and at some level it's impossible to get rid of all risk. If I thought I would have needed a professionally drafted agreement because the liklihood of getting screwed was high, I would have never taken the job, as bad business is not better than no business.
 
Re: Contractual obligations (rant)

I prefer to put a time limit on any written estimate I submit. They have until the date to accept it or it's a whole new ballgame. I'm pretty reasonable the first time around. After that it's strictly business. A boat for me, a fur coat for the Mrs...............
There's no doubt our relationship has been irrevocably altered. Trust has been lost on both sides, and it's clear the owner does not see or appreciate all of the unbilled time, favors, and miscellaneous butt busting I've done, and if I try to inform him of that now, I would appear to be whining. If we ever get past the current impasse (and I am hopeful that we will), I'll finish the work according to my proposal (for which I would end up in an OK place give or take a couple hours and will let my conscience sleep very well), but any future work will be handled with fewer behind the scenes "discounts", and a shorter net payment term.
 
Re: Contractual obligations (rant)

TJ, I would not do any more work until I'd been paid for time already worked (and materials). You are not a contractor, you are not a business, you're an employee. He's going to have to W2 you anyway, it appears, at best 1099... halfway into the project is not the time to be talking about a contractual agreement without a signed contract. If you don't have a signed contract, what the fuck do you have?
 
Re: Contractual obligations (rant)

TJ, I would not do any more work until I'd been paid for time already worked (and materials). You are not a contractor, you are not a business, you're an employee. He's going to have to W2 you anyway, it appears, at best 1099... halfway into the project is not the time to be talking about a contractual agreement without a signed contract. If you don't have a signed contract, what the fuck do you have?
I'm not an employee - employees get benefits. The only benefit I get is a headache. I am a private contractor in a 1099 situation, which is a business. My situation isn't ambiguous, and we do have an agreement - an agreed hourly rate and payment terms in writing, which has been successfully executed several times (he's paid my invoices, other than the last one). This isn't my first trip on the consulting merry-go-round.

The issue of note is that the owner wants to retroactively change our agreement and tie in previous work (the T&M money he owes me) to future performance (some kind of future contract to "finish" the system - whatever that means to him). This situation is unacceptable, and if I do end up having to take it to court (which is unlikely), it will be a very short case.

Ultimately I have much more leverage than he does - I'll get my money. If any relationship still exists after that happens, we will tighten the details of our arrangement to remove any question as to what will happen. Until then, a little tact and avoiding threats may go a long way in calming the situation, at least that's my hope.