Client Cancelled 2 year contract..

[tranz]

I had a client who broke a 2 year contract after 3 months.

In our contract that he signed becuase it was that long of a term and HE wanted the contract. I have the right to bill him for the remaining 21 or so months, lets say 20. I'll give him a break.

I spoke to the attorney and he said for us to bill him for what it states in the contract. About $4k

Do you think I should? or just let him go?

[markblair]

He signed a contract. He should know the penalty for breaking the contract. I say bill him and when he complains (because you know he will) make sure you have a nice letter put together showing the terms that you can send to his credit card company to battle the chargeback. But, yes, I would charge him for the remainder of the contract.

[tranz]

Thats what I was thinking too. just didnt know if I wanted to go through the battle.

[JeremyV]

since it was a contract that he physically signed, it holds water unlike the people who just sign up for a year of hosting and cancel after a month and issue a chargeback, etc. 4k is a fairly significant amount of money, especially now that he isn't using the service. So even the lawyer fees or whatever else is required would be worth it IMO.

[Adam]

Tony, charge him.

He shouldn't enter a legally binding contract if he had the intention of breaking it.

Contracts are put in place to stop people breaking rules and regs...not so they can just break them for fun.

As harsh as it sounds... bill him for the remainder. That's what i would do. As previously stated, i do believe law enforcement should be taught to people who do not take it seriously.

If you feel uncomfortable taking money which isn't really yours then do what i have previously done...give it to a charity or selection of charities :D

[Adam]

I mean registered charities like cancer research or poverty help..aid etc....not random people in the street :eek:

[bradley]

$4k is too much, IMHO, to just let slide. It would be worth the trouble for me. :)

[Adam]

If it will cost you $4k to bill him....how much will you be getting off him? For example if you're billing him only for $2k there'd be no point but if its in excess of $4k...my advice stands ground to go forward and continue to bill him.

[nameslave]

May I ask why there would be a 2-year contract that does NOT charge the full amount upfront? I guess there must be some kind of discount rendered to the client; but the administrative cost of allowing monthly (or even quarterly) payments is too high to justify that savings, not to say the risk of situations like this when the client breaks the contract.

More to the topic, I do know that some established companies actually refund unused portion of annual fees EVEN when it's NOT explicitly stated in any published documentation.

[Chicken]

Along the lines of what was posted aready...

Why was a two year contract drawn up?
Do you know the reason he wants to leave and break contract?

If I understand it correctly, you've been contacted by this client after only 3 months out of a 2 year contract. Client has indicated that he would like to cancel using your services. Now, have you mentioned to him that you two have a two year contract and while he can 'buy out' the remainder of the contract period ($4K), you prefer to have clients use the service and bill him monthly.

This is a subtle way of saying that you're going to bill him for the $4K unless he holds up his end. Using the term 'buy out' tells him that he *is* responsible for the contract period, no matter how he wants to work it.

[tranz]

The contract was transfered to me by the data center. The client had done business with the data center in the past and in some way failed to pay a portion of his contract. Roughly $200.

A new sales person at the same data center issued him a 2 years contract. When it got to their billing dept. they noticed it was a client that there was an outstanding balance of $200. The billing dept. did not want to honor the agreement drawn up by the client and the DC.

I was contact by the DC to see if I could assist the client with a solution. I was given the clients contact info and we hammered out a deal. This deal was seperate from the contract that he was going to execute with the DC.

The client wanted a server with a CP and on Windows. Start to see the problem...

I suggested several yet, he was unwilling to spend the added cost of a lic or a slight increase in a monthly fee.

I told him of NXPanel, gave him the sites url and informed him of the demo. If he liked its functionality then I would be more than happy to install it for him. I had also informed him that NXPanel was unsupported by us but it could be by the developer if he head questions. I would also try and assist him a little in the inital setup.

The install of NX was agreed to by the client. I performed the install and the server was operational.

The client at the onset of the agreement stated that he needed FrontPage extensions. The install of FP extensions were also completed at the time of the server setup. The client stated he needed ASP, this too was active.

The client needed 100IPs, these too were supplied.

The client had stated that he was on a server before and used Imail and O'Reily something to host sites.

He started to upload sites and after playing around with the settings for FP he was able to upload sites. He had indicated that the FP extensions were working as his sites navigation was there but that a page counter wasnt working. At his request I spent over 8 hours looking into it and trouble shooting. I uninstalled FP extensions and upgraded them to 2002 extensions. Once again the navigation worked but not the counter.

He also told me that when going to a url that sites were sometimes not comming up and then when refreshed they would. (Did I mention he is on a dail-up)
I once again trouble shooted as best as possible. I asked people from 6 different countries and 4 different states to pull up the sites to check this problem. Once again NO issues. I logged into my router to check and see if there were any issues there. None. I took the time to drive to the data center to take a first hand look at all the systems. NOTHING.

I was also NOT getting anyother complaints or tickets from any clients about sites not coming up. I even have several game servers, they would have noticed if something was up right away.

The server he wanted is a 1.7 Celeron, 256MB of ram and a 40G drive. This config was byhis choice not mine. I even offered to upgrade the ram to 512 for free.

I suggested and offered at no cost to format the box and set it all back up in order to fix the issues he was having. He refused saying he couldnt have any downtime.

I also suggested that he move off of Windows and to Linux and I could give him Plesk, Cpanel, Ensim whatever he wanted in order to get him up and running on a server with a stable CP. I informed him that on a Linux box he would need Chilisoft in order to run ASP scripts, I was told by him that he had it.

I asked if he wanted to go this route, he once again declined.

It's almost over.....................

He called me back a day later saying he was going to have a Windows person look into the box and see what was going on. I told him thats fine, but for that person to inform me of his findings and not to make any changes to the box without me knowing. This was agreed by the client.

SOOOOOOO, 3 weeks go by and I hear nothing from the client. I called several times to find out how everything was. I did not get a call back.

I then get an email stating that we did not live up to our end and that he does not want to use our services.

I STILL have not taken down his box and it has been over the weekend.


My poin to this very long post is that I feel that I went out of my way to try and make him happy and even give him some coding tips and education and that nothing did it in the end.

I put in over 30 hours total trying to assist him.

Yes, there are two sides to every story. Take mine for what you will.

I tried to do the $4680 on his CC and could only get $2500. I expect a call within a day or so when the batch posts tonight.

Ya know, this is the first client this has happened with.

So, now I have an open server..anybody need it? :)

[markblair]

Well, first, good riddance to that customer. Sounds like a real winner anyway. Also, the problem he mentioned with Internet Explorer failing to load the page and then when he refreshes, it loads, is a problem with Internet Explorer. I've experienced this in the past and it has to do with something in IE 6.0 and is fixed by a setting. The setting is under:

Tools ... Internet Options ... General ... Settings (under Temporary Internet Files section) and change the 'Check for newer versions of stored pages' option to 'Every visit to the page'. :D

What a story, by the way. It'll be interesting to see how the guy responds.

[Chicken]

Yeah, he does sound like one of those clients that you tyr and try, but ultimately they're not going to be happy, not to mention it's questionable that he has the resources to pay his bills.

I still would have asked him how he wanted to handle the remainder of the contract, and if he just wanted to buy it out or continue with service. The amount isn't really enough to go after though, which reminds me of how people post (on other forums) about how they're gonna sue a host over $15 worth of monthly fees. :rolleyes:

[Robert]

I say charge him.

I think he used the problems as an excuse to try to get out of the contract.

[tranz]

The $2500 is what went through. on his debit card.

I will keep you posted...

[Robert]

ouch you charged his debit card.... lol. poor man.. lol. but he did sign a contract.

[DizixCom]

Oof, I hope the contract had an early out termination clause that allows you to bill for the duration all at once.

When you start draining bank accounts bad things happen. I don't disagree that he should live up to his end of the contract, but I think I would have tried a more subtle approach, less destructive approach.

[tranz]

I was willing to work with him. I had tried to call him after not hearing anything from him for 3 weeks. if he was so upset why did it take him so long? He would have been calling support every day in that case.

That is the only card I had on file for him.

I am not saying I wasnt willing to work with the guy. Heck I still am. He can contiue to use the services, he is just paid upfront for them now. I would still work with him if he asked.

But, he decided to fire off an email saying he had been to the attorney ect.

He could have decided to call me and hammer something out, not come out swinging after not hearing from him for 3 weeks.

I by NO means wanted to take the course of action that I did. But, I had no other action to take at that point.

I do thank all of you that have commented. No matter how you felt about or commented about it. it is good to hear from your peers. For that I thank you.


From this point on I will make very general comments about the situation as I feel myself wanting to explain in further details but feel that it isnt needed here.

I just wanted to see your guys reactions to the general situation.

Thanks..

Tony

[Presage_Reg]

Wow. You certainly seemed to have offered to do everything you could for this client. You have done more than most would have done. With all that in mind.... charge him the remaining of the contract.

If a customer is reasonable and communicates with us, we will usually work something out that is acceptable to both parties. However, in a case like this, we would charge the full amount.

[Adam]

Tony, let me be one of the first to commend you on your actions and response to this situation. After reading the help you have given hmi also the amount of space you have given him to get everything u pto spec...i think you have gone far beyond your duty and done much more than most larger companies or heck even smaller companies would have went.

Well done!

[Living Media]

It could be that the client has been bullied in the past and now resorts to taking the "I've been to a lawyer" approach right off the bat. It could be that the client uses these words to intimidate. It could be any number of things.

Take the contract to a legal professional. Get legal advice on this. That's all I have to say...

...except I'm inclined to say, "Bill 'em, Dano". The client did sign a contract for services above and beyond what you provide standard. They asked for something special. They got special considerations. For them to give you this kind of runaround is impossible.

Another thought: start collecting information about collection agencies. You may want to think about turning this situation over to one of them. I don't know that you can sell off such a small amount; but a collection agency will take care of the legwork. They may also know how to go about getting this listed on this individual's credit report.

I think that you've been both utterly professional and extremely gracious. Don't just write the debt off, but get it handled by others so that you can 1) keep from getting soured; and 2) get back to the day-to-day issues and customer service. (Doing that also gives you emotional distance - you won't be inclined to start personalising this nit's actions.)

EDIT: Catching up, reading the rest...

Do you have a lawyer? You may need one. Draining the checking account is an iffy maneuver, unless your contract had a special stipulation in it or had something that stated that the client could not break the contract without paying a forfeiture and / or giving a minimum notice longer than "as of tomorrow".

[DizixCom]

I think a very vital piece of information is missing here. Were you authorized to bill the entire amount at any time or did the contract state specifically that this was to be billed over a two year period? If it is the latter, then I really hope there is an early termination clause that authorizes you to bill this client all at once.

I totally agree that you need to collect the money, I'm just not so sure that draining their checking account was the right way to do it.

Then again, I'm wrong an awful lot...

[tranz]

This is what is in the contract in 2 locations:

Cancellation Policy Customers who cancel prior to expiration of Initial Term will be invoiced for full amount of remaining contract balance. Renewal Term(s). Upon expiration of the Initial Term, the term shall be extended automatically for a period of thirty (30) days ("Renewal Term"), unless and until either party gives the other no less than thirty (30) days' written notice of a termination. The termination of any Service will not affect Customer's obligations to pay for other Service(s).

The inital term is the length of the inital contract.

Thus he was billed for the remaining amount, but not the full $4680 but $2500.

He also didnt terminate within the 30 days either. My billing system billed him for the month. Under my contract I have the right to do both. I have not had to do this with ANY other of my clients.

Yes, we do have a corp attorney.

It was not my intention to drain his checking account. I was my intention under my contract to collect the funds that were due to me under the agreement that he signed. Just not on one page but 4! he was the one when signing up gave me the card information. He decided where the funds were to come from.

He sent me the written notice on the 12th, You know I STILL havent cut off his server yet. I am still willing to work with him if he chooses.

I have gone out of my way for him. I dont mind doing it for a client that is going to be happy with the results.

[DizixCom]

Sometimes I like being wrong. Now that we know the whole story it makes perfect sense and you did exactly what you should have. Now go after the remaining $2180!

[markblair]

Originally posted by tranz:

This is what is in the contract in 2 locations:

Cancellation Policy Customers who cancel prior to expiration of Initial Term will be invoiced for full amount of remaining contract balance. Renewal Term(s). Upon expiration of the Initial Term, the term shall be extended automatically for a period of thirty (30) days ("Renewal Term"), unless and until either party gives the other no less than thirty (30) days' written notice of a termination. The termination of any Service will not affect Customer's obligations to pay for other Service(s).

According to this, you state that the customer would be invoiced if they cancel prior to the expiration of the term of the contract. But instead of invoicing, you billed him. I'm not disagreeing with what you did as you did try to satisfy this customer and you billed him for the remaining of the contract when he canceled. I guess the issue is that invoicing and billing are two different things. Especially when the funds come out all at one shot. Just my thoughts on this particular part of the issue. I still think you deserved to get the money from him as he did sign a contract. :)

[Adam]

That's a great point by markblair! I never noticed that however it may be something Tony that you should look into, maybe send him an invoice now, even though late....or have you already previously invoiced him?

Invoicing is defined as...

1. A detailed list of goods shipped or services rendered, with an account of all costs; an itemized bill.

2. The goods or services itemized in an invoice.

And billing i thought was defined as basically just collecting the funds...whereas according to the dictionary its quite similar to invoicing.....

1. To present a statement of costs or charges to.

2. To enter on a statement of costs or on a particularized list.

Did you provide some kind of list to services to the Client prior to charging him $2500 USD?

[tranz]

When we first set things up the invoice is the list of hardware and services that he will be getting AND what he will be billed for on a monthly basis for the life of the contract.

There is no where, it states that he is on terms as to payments. The client is not sent a monthly bill as the invoice indicates the amount he will be billed for monthly as well as the length of the agreement.

I checked with our attorney before I did anything and under his advisement I billed the client the remaining amount.

[markblair]

Originally posted by tranz:

I checked with our attorney before I did anything and under his advisement I billed the client the remaining amount.

Then you did exactly what you should have (not that I had any doubts, I really didn't) and you shouldn't worry too much about what his attempts at recourse will be. Who knows, maybe he'll just let the payment go through and feel you did what any business would have done in the same circumstances. Hopefully the entire situation can be put behind you soon so you won't have to worry about it any more. Thanks for the further explanation. I can imagine it's tough to tell as much as possible without saying too much to disclose anything that doesn't belong here. :)

[tranz]

lol, SO true..

I mean I am not upset or anything at the guy. I was still willing to work with him as much as possible. He just decided differently.

[bradley]

Not to cause any undue paranoia -- BUT I'd suggest editing out all of the specifics in any of your posts in this thread since this is a public forum. If the guy becomes angry enough, he will find as much as he can to use against you. Some of these posts might hurt your case.

AND.... good luck! :)

[Adam]

I dont think it will, we have shared or used his name, hsi contact email or basically any info which points to the person who Tony is charging.

Because there are no specifics which i can find if this post was ever to be brought up in trial it would be treated as a hypothetical.

Now it wuold be different if there was a name given out and address of person or anything to clearly show that we are talking about that SPECIFIC person.

[Adam]

The billing amount would be treated as an "example but not specific" if this post ever did go to court and was deemed a hypothetical (sorry out comes mysisters law stuff she imposed on me!)