January 31, 2007 1:21 AM   Subscribe

ClaimsCourtFilter: A web design client of ours had a verbal contract with us, approved both the design and the logo, and then reneged due to a "misunderstanding," after most of the work had been completed.

(This is ridiculously long because I'm also wondering if we're out of line or insane here, or if we're in the right. Basically: Verbal contract with client, did work, she reneges at very end to go with someone else. Click here to skip to the details and hit the real question. [If named anchor links work...]

Here's the long-winded breakdown: Met client through a networking group we're a member of. The member who referred us did so to his boss, whom we met with twice and spent several hours discussing things with. After meeting a second time and further fleshing out their requirements, we presented a physical contract which she opted not to sign at the time, so we could perhaps drop a feature and save some money. (We determined it would be a negligible savings for her and told her so. She still wanted the "new" contract.)

During this time, because we had a rapport through the networking group, we wanted to streamline this production, sent it off to our designers and had them crank out a complete logo and site design pretty rapidly. She approved (in email) the logo AND the site design and effectively gave a go ahead and a "what's next."

Upon reviewing our contract again, she questioned (at 10am) the following clause:
Authorization. The above-named Client is engaging [us], as an independent contractor for the specific purpose of designing a website to be published on a [us-owned] server.
She asked if she'd be required to host with us, or if she could continue using her existing host, and closed with: "Once I hear back from you I will get this signed and cut the check."

In meetings all day, we replied at 4pm:
The reason we push our clients to use our servers for hosting is because we can guarantee a level of service that we cannot when using another host. There is frequently a number of settings or applications not installed or properly configured, and it stands to impede us and slows down our development time while we wait for their support to make the necessary changes.
(This is completely true and our basic philosophy since we charge an almost-negligible amount for hosting, but we had discussed this earlier in person, and she seemed to understand and be okay with it, so I didn't think I was coming on strong here.)

She replied at 5pm:
I understand why you want to host the site what I am asking as I asked in the first meeting is it absolutely necessary? I can find out what they will or will not support prior to any work being done. I need to find out how long I have paid for and I don’t want to just throw it away and I am not 100% ready to move again. Both times I have moved my hosting it was a nightmare. I need to know if you are still wanting to proceed even if we do not move our hosting right away?
We replied within the hour stating that, since their site used ASP, we knew they were not on a PHP (which we required) package, and thus, didn't know if they could switch within their current provider. We closed with:
As we have mentioned during our discussions, you will not have to host with us but you will need to use a host that provides PHP and MySQL. We currently have the new site running in one of our development servers to work out a few more design tweaks so that the site matches a bit better with the logo/color you selected. Let me know how much time is left on your contract with 1and1 and when/where/if you would like to re-launch the site on a different server or not.
This is where it gets weird. She responds three days later with a letter from her hosting company saying she can jump to a PHP server no problem, but that:
It is my understanding I would just need to convert my 1&1 package to linux should we use your content management design. Due to this set back I have decided to interview a couple other web design companies that do not require us to have our site hosted with them. Should I decide to use the logo you have created what would this cost be?
I will wait to hear from you in regards to the logo.
From here, she continued with the interviewing of other clients, accused us of not being ethical, and further stated that we were clearly not connecting with her expectation of customer service. Within about two days. We made several calls to our point man, the guy who initially referred us and was there throughout all emails and meetings. She complained that we hadn't called her, despite the fact that we did last week (she wasn't there) and that our phones also ring. (They don't just dial.)

This is all by way of saying that I think she's being unreasonable, and trying to back out by latching on to the smallest chink she could find. She went on about how "this isn't about the money, it's about customer service," and how "other web design companies knew the ins and outs of 1&1's hosting plans, and I would expect you to know the same."

Clearly, there's a lesson learned in not performing work without a completed, signed physical contract and a retainer check in hand, but again, there were extenuating circumstances, and we figured they were good for it, so to speak.

Our course of action is as such:
  • Invoice for work completed anyway. Since most of it is done (and not just the logo), and was authorized, I'll attach the emails wherein she granted authorization, highlighted, and send it certified mail.
  • Have lawyer (friend) draft letter demanding payment.
  • Bring to small-claims court. (It's at the upper level of the small claims side of things.)
Are we crazy? Or did we have authorization to proceed?

What can we expect from small claims court? A tame form of Judge Judy style justice? I know we file through our court and they're served a notice to appear. Are we liable for anything if we lose? What can we do to be prepared? Any idea what our chances might be with a verbal contract? (In Arizona)

We are talking to some lawyer-folk, but I want to know if we're just insane from an outsiders perspective, or if she's trying to weasel out here. And more, for personal experiences with small-claims court.

Thanks for reading (skimming) this sojourn of a post. And for your experiences/take on things.
posted by disillusioned to Law & Government (16 answers total) 5 users marked this as a favorite
I would tell her that to use your logo it will cost her 80%?, 90%?, 100%? of the original contract terms, but you will throw in the rest for free. Also, that if she decides not to use the logo, you will be billing her for time. Have a lawyer write that up nicely. Mention the person who introduced you.

You're not crazy for wanting to be paid, but i have no idea about the merits of right or wrong except to say that as excerpted, from your point of view, it sounds like she freaked and is a flake. It does not sound like she is trying to get something for nothing as she offered to buy the logo and she is not in possession of the work. She likely id have some bad experiences with changing hosts and is in an irrational panic about it.
posted by JohnnyGunn at 3:31 AM on January 31, 2007

we figured they were good for it

No one, not even a relative (ESPECIALLY a relative) is ever good for it. Get 1/3rd money up front, before you lift a finger with any new client. Before you lift a second finger, they have to sign the contract. Explain this to them in business terms.

Are we crazy? Or did we have authorization to proceed?

Yes, you're crazy for proceeding without contract and money. No, you did not have authorization to proceed because we presented a physical contract which she opted not to sign at the time

You let her not sign the contract. Don't do that.

Do you really want to take this woman to court? She's already badmouthing you guys, do you need that attached to your rep?

Call her up and tell her you'll let her host elsewhere at the same price. If she agrees, fine, just remind her that you're not responsible for certain things.

If she STILL plays hardball, then you know she's a flake for sure. Decide if you really want to take her to court and continue dealing with her. Or you could knock 20% off the price and offer that to her, in the interest of meeting her "customer expectations" so she goes away happy.
posted by Brandon Blatcher at 4:07 AM on January 31, 2007

From her PoV, you've sprung something major (she'll have to move to new technology and hosting) which wasn't part of the contract negotiation, on her at the last minute, .

I really think you failed to keep your client fully informed here; you need to get round a table with her, explain that you understand her concerns, and see what you can salvage. At the very least, you need to walk away with your reputation intact.
posted by Leon at 4:14 AM on January 31, 2007

Start by sending her a bill, and if she doesn't pay it, take her to small claims. I took a client to small claims and won a couple of years ago; my company received compentsation for work done in a very similar situation. Small claims was pretty easy. If you have written doc you should have no problem.

And yeah, the contract thing. Big red flag. But we all make those kinds of mistakes and it doesn't mean she should get away with stiffing you. Even without the contract you did, in fact, have authorization to proceed-- you had written authorization via email.
posted by miss tea at 4:32 AM on January 31, 2007

You are not out anything provided she pays for the services rendered so far, which from your description is design only. Bill her and see what happens. But in her eyes all you did was the design. So bill her appropriately.
posted by Gungho at 4:41 AM on January 31, 2007

I know everyone is going to emphasise the unsigned contract, and I agree, but as the focus of your message seems to be all other associated events I might pick that...

I don't see the issue in her wanting to host elsewhere (regardless of what a great deal you might give). If you're absolved of the responsibility for maintaining service, then the choice is hers, right?

If you chose a technical platform that didn't suit her existing arrangements then she has every right to look elsewhere. I'd expect that a more technically oriented person (which I'm guessing she's not) may have made such a constraint clear up front however.

One of the other points you raised was if you folks should know about the hosting capabilities of different providers: "other web design companies knew the ins and outs of 1&1's hosting plans, and I would expect you to know the same." - I've got to admit I agree with her. At the least, you should have found out her provider and researched the possible different account options she may have had. Makes it easier to explain to her the possible transition (e.g. "stay with 1&1 and ask them to activate X on your account", or "you'll need to move to package B" etc). The hosting contract is hers, (and it's one she signed!) if she didn't want to move, she shouldn't.

Sure, get some $ for the logo which she liked, but seriously, move on.
posted by kaydo at 5:00 AM on January 31, 2007

You should have pointed out at the beginning that you were going to have to host the site yourself, especially if she already has an existing site. In her eyes, not signing the contract means she doesn't have to pay. You should not have proceeded with any work without her understanding she'd have to pay for your development time on the preliminary site even if she didn't sign the contract for the full site.

What sends up a red flag is that she's hosting with 1&1 and doesn't want to move. She's not using that "three years free" package from their offer a couple of years ago, is she?
posted by MegoSteve at 5:06 AM on January 31, 2007

My advice is to send her a price for the logo, tell her you're sorry for the misunderstanding, ask if she'd like to meet to try to clear up the misunderstandings, and forget the lawyer / small claims court. Your company handled this thing less than professionally. I'd take it a lesson learned:

Don't do any work for which you expect to get paid, until you have a contract signed. Had you waited until the contract was signed, you would have had to have hammered out the hosting arrangements before you wasted any time working for her. If you insist on hosting projects (which is, in and of itself, not a problem, but which may rightfully be seen as a problem by some customers), then you would have cleared this point up before getting started with any work.
posted by syzygy at 6:20 AM on January 31, 2007

She approved the site design. Did she approve the web development?

I do feel sorry for you but don't go ahead with a process until you've informed the client of exactly what they are getting. I'd charge for the logo which she will pay for and just let the rest go. That's the professional thing to do imo.
posted by twistedonion at 6:35 AM on January 31, 2007

This dog is gun shy. She got burned in the past, as she stated, and doesn't want it to happen again. She probably doesn't know the difference between an ASP and a space ship.
You know, if you expect to get paid, you need a signed contract! You screwed up. Question is how bad do you want to screw this up further? My advice is to extend a big olive branch, write her a letter of apology and say you made a mistake- who cares about the reality. Give her the logo and let her know you are still available and ready to work. You would have to be crazy to go to court as you can be sure she will tell each and every contact she has about her horror story with you.
posted by bkeene12 at 6:59 AM on January 31, 2007

It sounds like your company are the ones trying to weasel extra money out of her, by forcing her to use your hosting.

She never signed the physical contract, and your communications with her seem to consist mostly of negotiations over the hosting situation.

You said she "effectively" gave a go-ahead, but you don't quote from that email. I would say there was no authorization.
posted by falconred at 7:55 AM on January 31, 2007

Response by poster: Thanks for the comments, all.

In both our meetings, we had discussed the hosting solution and made clear (to more than just her in the room) that if not using us for hosting, she'd need PHP. She was savvy enough to ask the 1&1 people if they would allow her (under her contract) to switch plans, which was really all we didn't know off hand. (We're well aware that 1&1 offers Linux-based, PHP-capable plans, clearly.)

Of course, this was the case from the very beginning, and not a last second thing, which makes me think she's using it as an outlet for her cold-feet response.

We tried the olive branch approach yesterday, when she berated me and my business for 10 minutes on the phone. I'm not trying to screw anyone over, but I moved forward in good faith and had told her as much in our last meeting, and in a few emails, because things seemed solid, and because of our previous connection. Again, we don't usually start work without a contract, but I guess the exception to the rule is where you get into trouble.

Thanks again, all.
posted by disillusioned at 9:47 AM on January 31, 2007

She sounds reasonable and calm in those emails, nothing close to berating. It seems to be like poor communication on your part. Maybe you should hire someone on who specialises in client relations so this won't happen again.
posted by loiseau at 10:46 AM on January 31, 2007

I'm not saying you are any of these things, so don't get offended, but the IMPRESSION i get about your company (and this is just from your description of the events, keep that in mind before running to court):

Inexperienced - Because you moved forward on a project without a signed contract or purchase order.

Deceptive - Insisting and/or standing in the way of a client using any hosting service except your own.

Arrogant (You have an inflated view of your company's stock/status in your market) - you let three days go between when you presented something to her and when she actually responded. No follow up? You want her money, she doesn't need to call you. There are other providers.

If you were unsure if you had official authorization to proceed (which you did not), you should have been on the phone with her everyday giving her status reports.

Communication is the hallmark of customer service.

You screwed up. Chalk it up as an experience, learn from it and move on.
posted by sandra_s at 12:50 PM on January 31, 2007

>Are we crazy? Or did we have authorization to proceed?

You're not crazy, but no, you didn't have authorization to proceed.

For me, there's a really strong clue to what was going on in this: "Both times I have moved my hosting it was a nightmare. " -- the client had a really strong negative emotional reaction to switching/changing hosts, and you didn't pick up on it.

I'm very cool with hosting changes. It wouldn't bother me. But I hate spiders. If you showed me a design with a spider in it, I would have an extreme, almost physical reaction to it. I would want to cover it up, or leave the room or something.

I think changing hosting companies has been so awful for her before that for her, it's a spider. And you should probably have picked up on that a lot more, and talked her through the process/explored alternatives/assured her this time it wouldn't be the same, etc.

By coincidence, I just got sent a link to this article: Contract, Schmontract:
"it’s awkward to suddenly turn hard-nosed about getting a signed contract before starting work. It is certainly easier to just smoothly transition from the sunny optimism of the proposal process to the nitty-gritty of the project itself. But, as I hope I’ve outlined in this article, a well-drafted contract protects both sides and clarifies the designer/client relationship in many non-legal ways as well."
posted by AmbroseChapel at 4:04 PM on January 31, 2007

While it might not be advisable to work without the legalese of a contract, that really isn't the issue here.. You drew up formal terms, and they were refused, then you proceeded anyway. If you hadn't bothered with any contract at all, you might have an argument, but a contract was presented and refused!

Anyway, there is no reason you can't salvage this. She yelled at you for 10 minutes, so what? She's the customer, so she's right, that is the cost of doing business. Take the yelling, apologize, and get back to work.
Honestly, I know it isn't that easy, but I think it is the right answer.

If her terms are so terrible that you will not be able to make a success of the project, take it as a blessing that you have this opportunity to get out. Sure, try to recover a little of the value you've sunk into it, but be very very reasonable about it. You need her to be happy about paying, any other outcome is bad for you in the end.
posted by Chuckles at 12:37 AM on February 1, 2007

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