FN-FORUM: Contract termination - any legal experts?

date posted 2nd August 2007 07:12

Hi all,

I mailed the list a week or so asking for some advice about a
potential situation with a customer that I suspected was about to
happen. Well, it has happened, and it is actually worse than I had
thought. So I'd really appreciate any advice anyone can offer on this.

My company has been working as a consultancy to a public sector body
for a couple of years. The contracts have always been fixed price,
but they have always conducted the projects on the basis of us
working a certain number of days and them paying monthly invoices
reporting on the number of days worked. In the contract there is a
requirement for one month's written notice on either side, but no
mention of payments.

A month or so they suddenly sent out a curt email telling us to
suspend work while they carried out an internal review (it turns out
they have had a major reshuffle and declared this project to be
"legacy" work). They gave no further information despite me prompting
them until yesterday, when they emailed me a scanned pdf of a letter
terminating the contract with one month's notice. They stated that
they expected me to cease work at once (so actually not a month's
notice at all).

Here is where the problem is. At the time they suspended the work I
had nearly a month's work about to be invoiced, so at the end of June
I invoiced them as usual. They have not paid that invoice, which is
now more than 30 days overdue. Instead, in the letter they have
offered to pay this invoice as a gesture if I will accept that as
full and final settlement.

So in summary, they have kept me dangling for a month, then
terminated the contract with immediate effect, and graciously
offering to pay an outstanding bill instead of a termination payment.
The terms of the letter are quite hostile (I should mention that this
itself is a surprise - we have had extremely good relations with them
up to now, and the project was on track) and they are clearly holding
out the unpaid bill as a bargaining tactic to get me to agree to go
away quietly.

My question is, can I expect a payment for the one month's notice?
And can I expect them to pay me for the month they kept me hanging
around (they implicitly reserved the right to restart the project at
any time during this period, and in fact they have done similar
things in the past, so it would not have surprised me if they had).
Or should I just settle for them paying their outstanding bill?

Where would be a good place for me to get some legal advice on this
(it doesn't seem like my family solicitor's territory somehow)?

Any help much appreciated. Sorry about the anonymity - hopefully the
reason for this is clear.