[HSConstruction]

I have a customer who is holding out on $6k after terminating the contract because he now disagrees with the terms. I am in the right and have the contract to back me up. My concern is spending as much or more to prove I am correct. Any thoughts?

 

[Kent Whitten]

Arbitration does not guarantee anything. If your lawyer is expensive, then you could burn that 6K up in no time. 5-10K is a very gray area. Depends on what you want to accomplish. Maybe go to small claims if you can collect up to 5K.

 

[Teetorbilt]

If you plan on bringing in attny., no. Mine told me that 12K was the BREAK-EVEN point.

If it's just one on one, I've never had to do it and will defer to others.

 

[Ben of Hyde]

Yes.

If you feel ripped off and can't see why they would back out of a contract then sue the bastards, if you win it's cost plus your money.... anybody can sue a ham sandwich, make sure you've tried everything else first. and document, document, document.

 

[galla35]

Mine told me that 12K was the BREAK-EVEN point.

thats pretty much true anything less than 10K your not gonna get much after your att. bill

 

[Kent Whitten]

if you win it's cost plus your money

There's a chance you can get your atty. fees back, but it's 50/50 and more than likely zero chance in arbitration even if you win.

Say you sue for 10K and there are 10 contested items. If you get 9 out of the 10, you don't win and you don't usually get your atty's fees. You win by getting 10 out of 10.

I heard the same thing as Teetor except mine was 10K. Inflation....

Litigation is a game you may not want to play. It's not fun. Find any and all alternatives first, use litigation last.

 

[HSConstruction]

That is what I figured, it will cost more to prove I am right and I will end up with a debt to my lawyer.
What options have others used?
I have thought of a strongly worded letter from my atty, collection, just let it ride at 24% apr or a lien.

It is more about principle than money at this point....and I just want what I earned.

 

[Ben of Hyde]

As I've mentioned before I'm out 130k ... I'll get something but theirs no one left to get it from ... you just gotta get in line and settle of pennies on the dollar like everyone else.


Like a pack of hyenas at dinner time; you don't wanna be the last one to the table when the property owner goes down.

 

[Brickie]

I have a customer who is holding out on $6k after terminating the contract because he now disagrees with the terms. I am in the right and have the contract to back me up. My concern is spending as much or more to prove I am correct. Any thoughts?

Start slapping them with liens asap:thumbsup:

 

[Zinsco]

Never sign a contract with an arbitration clause. Arbitration is the most amateurish, silly form of dispute resolution there is. This would have been perfect for small claims court.

 

[jhark123]

Start slapping them with liens asap:thumbsup:

Yep, that is the only way to POSSIBLY recover. Hope that you get paid when someone wants to sell

 

[Metro M & L]

I say go to arbitration without an attorney. Hope to settle for half the debt. You get 3k and no risk. If the arbitrator finds for the defendent you're right back where you started.

 

[greg24k]

File a claim in a Special division court for breach of contract. Here is the form Fill out the aplication and file it. They will contact theirs lawyer to consult, if they have no case, theirs attorney will try to scare you with the letter or a phone call by saying if you don't drop the case they will go after you for this and that. After they do that,consult your attorney and see if you have a leg to stand on. If you do, your lawyer will tell you what to do from there. In most cases it will be settled out of court between lawyers on the phone,just have patience and the closer to the court date it gets the better deal they will offer. If you have a lawyer who handles all your legal work and you give him all your business, he will not charge you alot if anything at all. If you go to court you will pay 35% attorney fee, unless it will get settled to avoid the trial. When filing a claim, make sure the amount you enter is the whole and total amount of the contract.

 

[Zinsco]

When you have an arbitration clause in a contract it disallows other forms of dispute resolution such as a real court. The OP probably can't go the court route.

 

[Kgmz]

I say go to arbitration without an attorney. Hope to settle for half the debt. You get 3k and no risk. If the arbitrator finds for the defendent you're right back where you started.

I agree.

If you feel your contract is rock solid, what have you got to lose. Nothing much more than where you are at right now, but if you are right you gain everything.

 

[festerized]

Last Year I got beat for $6000.00. My contract saved me in arbitration.
Make sure you have an arbitration clause in your contract:
Article 12. Arbitration of Disputes

12.1 Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association under its Construction Industry Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.


Article 13. Warranty

13.1 At the completion of this project, Contractor shall execute an instrument to Owner warranting the project for (number of years) against defects in workmanship or materials utilized. The manufacturers warranty will prevail. No legal action of any kind relating to the project, project performance or this contract shall be initiated by either party against the other party after (number of years) beyond the completion of the project or cessation of work.


Article 14. Termination of the Contract

14.1 Should the Owner or Contractor fail to carry out this contract, with all of its provisions, the following options and stipulations shall apply:

14.1.1 If the Owner or the Contractor shall default on the contract, the non-defaulting party may declare the contract is in default and proceed against the defaulting party for the recovery of all damages incurred as a result of said breach of contract, including a reasonable attorney’s fee. In the case of a defaulting Owner, the Earnest money herein mentioned shall be applied to the legally ascertained damages.

14.1.2 In the event of a default by the Owner or Contractor, the non-defaulting party may state his intention to comply with the contract and proceed for specific performance.

14.1.3 In the case of a defaulting Owner, the Contractor may accept, at his option the earnest money as shown herein as liquidated damages, should earnest money not cover the expenses to date, the Contractor may make claim to the Owner for all work executed and for proven loss with respect to equipment, materials, tools, construction equipment and machinery, including reasonable overhead, profit and damages applicable to the property less the earnest money.


Article 15. Attorney Fees

15.1 In the event of any arbitration or litigation relating to the project, project performance or this contract, the prevailing party shall be entitled to reasonable attorney fees, costs and expenses.

 

[HSConstruction]

My contract has an arbitration clause, but in the last 24 hrs it seems the owner and I are seeing a little more eye to eye. I want to just work it out and move on but if no headway is made soon I will persue it further.

The invoice is past due by 30+ days

 

[Mcbook]

Sue 'em

I agree with Ben of Hyde––but, I also have to tell you that I just finished a novel, yes, a novel that covers defect litigation that will prove the point.
"Conflicts with Interest" at Amazon.com. Let me know what you think?

 

[greg24k]

You post this a month ago...you didn't get your money yet? The longer you wait, the harder it will be to collect.

 

[skyhook]

I have a customer who is holding out on $6k after terminating the contract because he now disagrees with the terms. I am in the right and have the contract to back me up. My concern is spending as much or more to prove I am correct. Any thoughts?

I say go to arbitration without an attorney. Hope to settle for half the debt. You get 3k and no risk. If the arbitrator finds for the defendent you're right back where you started.

My contract has an arbitration clause, but in the last 24 hrs it seems the owner and I are seeing a little more eye to eye. I want to just work it out and move on but if no headway is made soon I will persue it further.

The invoice is past due by 30+ days

As the old saying goes "Never risk more than you can afford to lose"
Going into arbitration without an attorney is a sure way to lose the case. Arbitrators and attorneys will have absolutely no sympathy for you. The other parties attorney will eat you alive and spit out the bones.

My solution is never get into this position in the first place.
Add at least 10% to every contract. Be ruthless on every change order.
When it comes to the final payment, you've already covered your a$$. If you collect, Great, if not, no biggie.