What should I do about a client who owes money?
August 9, 2007 4:53 PM Subscribe
A client stopped a cheque they gave me as payment for musical services rendered. They don't respond to my demands for payment. What options do I have?
My string quartet was hired by a DJ company for a wedding at which we were asked to stay for twice as long as originally agreed in writing. A verbal agreement was reached on the day as to our fees (including extras for taxis and for an overnight stay which became necessary) and one of the DJs wrote me two cheques adding up to the total amount. One of the cheques cleared but the other (nearly 50% of the total) was stopped by the client.
No one from the company is answering phone calls or returning emails. I spoke to the person who wrote the cheques, who said that our fees were felt to be unreasonable and that they are trying to come to an arrangement, but it has now been nearly two months since the event and I have no reason to believe that they are willing to pay even part of the debt, given their non-communication.
I am considering taking them to court, but:
1. We had no written agreement apart from an emailed booking confirmation. The client never signed our contract, which among other things specifies our rates for overtime. Does the email plus the stopped cheque (which I have) count as evidence of an agreement?
2. I only have a PO Box address for the company (Tourasia). Should I sue the individual(s) or the company? It seems that Tourasia is only a trading name, and I don't have postal addresses for either of the individuals, despite extensive web searching.
3. Is it worth my while pursuing this at all? I have paid the other players their full fees, so I am personally out of pocket for the full amount of the debt.
My string quartet was hired by a DJ company for a wedding at which we were asked to stay for twice as long as originally agreed in writing. A verbal agreement was reached on the day as to our fees (including extras for taxis and for an overnight stay which became necessary) and one of the DJs wrote me two cheques adding up to the total amount. One of the cheques cleared but the other (nearly 50% of the total) was stopped by the client.
No one from the company is answering phone calls or returning emails. I spoke to the person who wrote the cheques, who said that our fees were felt to be unreasonable and that they are trying to come to an arrangement, but it has now been nearly two months since the event and I have no reason to believe that they are willing to pay even part of the debt, given their non-communication.
I am considering taking them to court, but:
1. We had no written agreement apart from an emailed booking confirmation. The client never signed our contract, which among other things specifies our rates for overtime. Does the email plus the stopped cheque (which I have) count as evidence of an agreement?
2. I only have a PO Box address for the company (Tourasia). Should I sue the individual(s) or the company? It seems that Tourasia is only a trading name, and I don't have postal addresses for either of the individuals, despite extensive web searching.
3. Is it worth my while pursuing this at all? I have paid the other players their full fees, so I am personally out of pocket for the full amount of the debt.
Er, sorry, you're not the DJ, you're the string quartet. Still, you don't want to be the string quartet that sues the people who hire it.
posted by ikkyu2 at 5:01 PM on August 9, 2007
posted by ikkyu2 at 5:01 PM on August 9, 2007
Depends on how much you want your name bandied about as the DJ who sues his clients.
Still, you don't want to be the string quartet that sues the people who hire it.
I don't see any problem with being the string quartet that sues people who hire it but refuse to pay it.
Seems like the only customers who would be put off by that, are customers you don't want anyway.
posted by jayder at 5:31 PM on August 9, 2007 [2 favorites]
Still, you don't want to be the string quartet that sues the people who hire it.
I don't see any problem with being the string quartet that sues people who hire it but refuse to pay it.
Seems like the only customers who would be put off by that, are customers you don't want anyway.
posted by jayder at 5:31 PM on August 9, 2007 [2 favorites]
Where I live, a customer who stops payment on a check given in payment for merchandise or services can be prosecuted under the state worthless check law, i.e., the same law that covers people who write checks that are returned for insufficient funds. The local district attorney actually has a program where the prosecutors send a letter to the check-writers, informing them of the potential criminal penalty and giving them one more chance to pay.
You might look into whether the local district attorney (or similar prosecutor; I don't know if you're in the U.S. or not) has a program that helps collect such debts, and prosecutes deadbeats when collection efforts fail.
posted by jayder at 5:34 PM on August 9, 2007
You might look into whether the local district attorney (or similar prosecutor; I don't know if you're in the U.S. or not) has a program that helps collect such debts, and prosecutes deadbeats when collection efforts fail.
posted by jayder at 5:34 PM on August 9, 2007
(jayder, I don't think the UK (where the OP seems to be) has such a direct sanction for bad cheques.)
A verbal agreement can have just as much standing as a written one, but providing evidence of one to a court is obviously a great deal harder than with a signed contract. This doesn't sound like a slam-dunk small claims case unfortunately, as I'm sure the other side will tell a different story. It may be worth you running it all by a solicitor though.
You could at least send a "letter before action" threatening legal action, which may make them take notice. In any case this is a prerequisite before going to court - the letter (send recorded) ideally sets out exactly what you want, why you believe you are owed it, and a deadline (14 days or whatever) for payment before you take further action. You could also mention that you're entitled to claim interest on overdue payments, though that may be shaky as it depends on what payment terms were actually agreed.
All that said, to (threaten to) sue someone you need an address for them, and it sounds like your dealings were with a company not an individual (this is part of the reason people set up limited companies, to avoid personal liabilities). If there is an actual limited company you should be able to find their registered address via the webcheck at http://wck2.companieshouse.gov.uk/ (online in office hours). If they are just sole traders then threaten to sue them personally - which is actually a more serious threat (in theory), as they can't just dissolve the company, and potentially you can go after their personal assets.
posted by wilko at 5:44 PM on August 9, 2007
A verbal agreement can have just as much standing as a written one, but providing evidence of one to a court is obviously a great deal harder than with a signed contract. This doesn't sound like a slam-dunk small claims case unfortunately, as I'm sure the other side will tell a different story. It may be worth you running it all by a solicitor though.
You could at least send a "letter before action" threatening legal action, which may make them take notice. In any case this is a prerequisite before going to court - the letter (send recorded) ideally sets out exactly what you want, why you believe you are owed it, and a deadline (14 days or whatever) for payment before you take further action. You could also mention that you're entitled to claim interest on overdue payments, though that may be shaky as it depends on what payment terms were actually agreed.
All that said, to (threaten to) sue someone you need an address for them, and it sounds like your dealings were with a company not an individual (this is part of the reason people set up limited companies, to avoid personal liabilities). If there is an actual limited company you should be able to find their registered address via the webcheck at http://wck2.companieshouse.gov.uk/ (online in office hours). If they are just sole traders then threaten to sue them personally - which is actually a more serious threat (in theory), as they can't just dissolve the company, and potentially you can go after their personal assets.
posted by wilko at 5:44 PM on August 9, 2007
I should add, the fact you have the cheques is certainly in your favour, I'd probably point that out to them (why would they write a cheque if there was never any agreement to pay that amount?)
posted by wilko at 5:58 PM on August 9, 2007
posted by wilko at 5:58 PM on August 9, 2007
Best answer: We had no written agreement apart from an emailed booking confirmation.
While an oral agreement can constitute a contract, you don't need any sort of agreement. You have a signed, presumably valid cheque that was later dishonored. In the UK, you can "sue on the cheque" which itself will be evidence of a debt, even if no debt would otherwise exist.
You will need to serve the claim on the defendants and I don't think mail to a PO Box will cut it. Civil Procedure Rules 6.5(6) lists the kinds of addresses you can serve on if you can figure out the residence of the proprietor or their place of business. Royal Mail says that it reserves the right to disclose a PO Box holder's address on the request of anybody, so this might be the easiest way.
Is it worth my while pursuing this at all?
If you can figure out how to serve the claim on them, I would say yes. It is easy to file a small money claim in the English courts. Unless you behave unreasonably or it is much more complicated than you let on, your claim will be allocated to the small claims track where if you lose you will not be out anything more than your court costs. If you win, they have to pay your costs.
You must write a letter before action before as wilko suggests. Figuring out the proprietor's home address and sending a letter registered post will let him know that you mean serious business.
I agree with jayder, what you don't want to be known as is the guys you can screw over and write bad cheques to without consequence.
How much money do they owe you?
posted by grouse at 6:19 PM on August 9, 2007
While an oral agreement can constitute a contract, you don't need any sort of agreement. You have a signed, presumably valid cheque that was later dishonored. In the UK, you can "sue on the cheque" which itself will be evidence of a debt, even if no debt would otherwise exist.
You will need to serve the claim on the defendants and I don't think mail to a PO Box will cut it. Civil Procedure Rules 6.5(6) lists the kinds of addresses you can serve on if you can figure out the residence of the proprietor or their place of business. Royal Mail says that it reserves the right to disclose a PO Box holder's address on the request of anybody, so this might be the easiest way.
Is it worth my while pursuing this at all?
If you can figure out how to serve the claim on them, I would say yes. It is easy to file a small money claim in the English courts. Unless you behave unreasonably or it is much more complicated than you let on, your claim will be allocated to the small claims track where if you lose you will not be out anything more than your court costs. If you win, they have to pay your costs.
You must write a letter before action before as wilko suggests. Figuring out the proprietor's home address and sending a letter registered post will let him know that you mean serious business.
I agree with jayder, what you don't want to be known as is the guys you can screw over and write bad cheques to without consequence.
How much money do they owe you?
posted by grouse at 6:19 PM on August 9, 2007
At present, you have the payment you were originally (before the extended play thing happened) expecting to get, and you've effectively wasted the rest of the time you spent at the gig.
Now, I don't know what musicians of your calibre make per hour, but I'm willing to bet it's less than what lawyers make per hour; and even though there are four of you, I'd expect it's going to take you far more musician-hours to get paid what you're owed than you've already lost.
Put it down to education, and blacken that client's reputation on the musician grapevine.
posted by flabdablet at 6:30 PM on August 9, 2007
Now, I don't know what musicians of your calibre make per hour, but I'm willing to bet it's less than what lawyers make per hour; and even though there are four of you, I'd expect it's going to take you far more musician-hours to get paid what you're owed than you've already lost.
Put it down to education, and blacken that client's reputation on the musician grapevine.
posted by flabdablet at 6:30 PM on August 9, 2007
OK, I should have read more carefully: you're out of pocket.
Really, the decision on whether to pursue this or not comes down to a calculation based on how many hours you think you'll need to put into the project vs. your hourly rate. You may still be far better off putting those hours into playing music for clients who do actually pay.
I speak as one who fixes computers for a stupidly low hourly rate. I don't bother pursuing people who don't pay up; I just won't fix their computers again.
posted by flabdablet at 6:36 PM on August 9, 2007
Really, the decision on whether to pursue this or not comes down to a calculation based on how many hours you think you'll need to put into the project vs. your hourly rate. You may still be far better off putting those hours into playing music for clients who do actually pay.
I speak as one who fixes computers for a stupidly low hourly rate. I don't bother pursuing people who don't pay up; I just won't fix their computers again.
posted by flabdablet at 6:36 PM on August 9, 2007
In my state, even a stop payment is considered a bounce and the check can be turned over to the DA for criminal prosecution if they don't pay within 10 days. Your state may be similar, call the DA's office and get a free consult from a lawyer.
posted by IronLizard at 7:08 PM on August 9, 2007
posted by IronLizard at 7:08 PM on August 9, 2007
IronLizard: this is the UK. I doubt the Crown Prosecution Service or the Police would be interested.
posted by grouse at 7:13 PM on August 9, 2007
posted by grouse at 7:13 PM on August 9, 2007
Well, that's not very nice of them, now is it?
posted by IronLizard at 8:07 PM on August 9, 2007 [1 favorite]
posted by IronLizard at 8:07 PM on August 9, 2007 [1 favorite]
When I had the occasion to put a stop payment on a check, I was pretty surprised to learn that it was only a temporary hold--180 days if I remember correctly. This was for a major US bank, I don't know if it'd be different in the UK. But it'd be worth chequing (sorry) with their bank to see what the policies are. Oh, the sweet revenge of getting your money when these jerks had forgotten all about it--I can almost taste it.
Hope it works out. And I hope my old landlord isn't reading this.
posted by hydrophonic at 10:09 PM on August 9, 2007
Hope it works out. And I hope my old landlord isn't reading this.
posted by hydrophonic at 10:09 PM on August 9, 2007
IAAL but IANYL. That you were given a cheque in payment is evidence that there was a contract between you. But whether or not it would be worth pursuing through the courts depends on how much time and effort you're willing to put into it, with no absolute promise of recovery at the end of it. If the proceedings are not defended, you can obtain judgment in default.
As grouse says, it's important to serve the papers properly, and this can be on the company's registered office. You can find out the registered address (if it's a limited company and not a partnership or sole trader) from Companies House.
But if you do get judgment against the company, enforcement of the judgment shouldn't be a problem because you know their bank account details. It would be a simple matter to get a third party debt order. What this means is that if a judgment debt remains unpaid, you can go back to court and say 'look, this is their bank details, permit me to get the money direct from their bank' and the court should order the bank to pay the debt direct from the company's account.
posted by essexjan at 11:28 PM on August 9, 2007
As grouse says, it's important to serve the papers properly, and this can be on the company's registered office. You can find out the registered address (if it's a limited company and not a partnership or sole trader) from Companies House.
But if you do get judgment against the company, enforcement of the judgment shouldn't be a problem because you know their bank account details. It would be a simple matter to get a third party debt order. What this means is that if a judgment debt remains unpaid, you can go back to court and say 'look, this is their bank details, permit me to get the money direct from their bank' and the court should order the bank to pay the debt direct from the company's account.
posted by essexjan at 11:28 PM on August 9, 2007
essexjan brings up a good point that should always be remembered. Even if you win the judgment you will still have to collect. While there are tools like third party debt orders and you can send in bailiffs to seize goods, if these guys are really dodgy they can try to avoid you by emptying their bank accounts and they can refuse to admit bailiffs to a private residence.
Now there's an added wrinkle we couldn't see while the Companies House web site was down overnight. There have been two companies named "Tour Asia Ltd" registered. One had an address near their PO Box and dissolved in 2005. The other was registered in Birmingham and dissolved in July. But I think you said that the cheque was written by an individual (was this deleted?) rather than by a limited company, so that may not matter. Except that it is a red flag meaning that the dodginess factor is increasing and you may not be able to collect a valid judgment.
First thing to do is to get the address preferably of the individual whose account name is on the cheque. Then send them a letter by recorded post clearly marked "LETTER BEFORE ACTION." Say that a person who writes a cheque unconditionally agrees to compensate the payee if it is dishonored under the Bills of Exchange Act 1882 s 55(1)(a), including interest under the Bills of Exchange Act 1882 s 57(1)(b) (you should specify a reasonable amount for interest, such as 8 percent). Specify the total amount and say that if you are not paid in 14 days you will issue county court proceedings to recover the debt, plus costs and interest.
hydrophonic: I don't think it works like that here. After you countermand the cheque, the bank no longer has any authority to pay it.
This thread is going to show up on their referer logs. You might want to ask a mod to delete the hyperlink.
posted by grouse at 3:02 AM on August 10, 2007
Now there's an added wrinkle we couldn't see while the Companies House web site was down overnight. There have been two companies named "Tour Asia Ltd" registered. One had an address near their PO Box and dissolved in 2005. The other was registered in Birmingham and dissolved in July. But I think you said that the cheque was written by an individual (was this deleted?) rather than by a limited company, so that may not matter. Except that it is a red flag meaning that the dodginess factor is increasing and you may not be able to collect a valid judgment.
First thing to do is to get the address preferably of the individual whose account name is on the cheque. Then send them a letter by recorded post clearly marked "LETTER BEFORE ACTION." Say that a person who writes a cheque unconditionally agrees to compensate the payee if it is dishonored under the Bills of Exchange Act 1882 s 55(1)(a), including interest under the Bills of Exchange Act 1882 s 57(1)(b) (you should specify a reasonable amount for interest, such as 8 percent). Specify the total amount and say that if you are not paid in 14 days you will issue county court proceedings to recover the debt, plus costs and interest.
hydrophonic: I don't think it works like that here. After you countermand the cheque, the bank no longer has any authority to pay it.
This thread is going to show up on their referer logs. You might want to ask a mod to delete the hyperlink.
posted by grouse at 3:02 AM on August 10, 2007
Response by poster: Thanks for all your helpful answers. As grouse points out, the company was dissolved in 2005 and the PO Box I have for them is no longer in use, so I can't get the registered address behind it. I've written to the administrators of several websites where the company is listed and hope one of them will be able to provide a valid address.
posted by cbrody at 7:03 AM on August 10, 2007
posted by cbrody at 7:03 AM on August 10, 2007
Royal Mail won't even give you the registered address that was previously in use for the PO Box?
The limited company that was dissolved in 2005 can't be the company you were dealing with since it no longer existed. But maybe some of its directors are also the people you were dealing with. You can get a list of the names and addresses of company directors and secretaries from Companies House but you will have to pay £1 for it.
posted by grouse at 7:33 AM on August 10, 2007
The limited company that was dissolved in 2005 can't be the company you were dealing with since it no longer existed. But maybe some of its directors are also the people you were dealing with. You can get a list of the names and addresses of company directors and secretaries from Companies House but you will have to pay £1 for it.
posted by grouse at 7:33 AM on August 10, 2007
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Depends on how much you want your name bandied about as the DJ who sues his clients.
I don't mean to suggest that what happened to you was fair. It sucks. But realistically the cost to you of going after what you're owed may be more than what you're owed.
Write it off as a learning experience, and write it off on your company's tax return as an uncollectible. If you're careful, it won't happen to you again.
posted by ikkyu2 at 5:00 PM on August 9, 2007