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I had started a project with a fairly new client about six months ago. Up until three months ago, they had been paying me without delay, but unfortunately, my latest invoice is currently unpaid and reaching the three-month mark of non-payment.

My usual payment terms are either immediate payment or a maximum term of 30 days. I've told the client explicitly that I cannot wait around for them to pay. They've responded that they will pay, but they haven't. This has been ongoing for three months; I've kept emailing them, but they have not paid.

I currently hold physical assets from the client; I have told them that if they do not promptly pay, I will have no option but to discard or sell these items to help make up for the outstanding invoices. However, they've said that if I take these actions, they will bill me for the total amount of the assets. They've also said that I would need to forward all completed work as per the NDA and the company's Terms and Conditions.

As a freelance contractor, I do not want to work for a client who cannot pay on time, so I want to cancel the contract. Would I have full rights to cancel the contract and void a signed NDA? What options do I have with a non-paying client such as this one?

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    This is a possible duplicate of Clients who don't pay their invoices what are your options?. Does your contract include language regarding late payment or non-payments? Have you delivered anything to your client yet?
    – Chris Forrence
    Mar 23, 2015 at 15:05
  • thanks for the message, not not a duplicate this is specific to my issue, as i wanted to know where i stand with the NDA, not really but as a contractor i cannot not get paid if i am working on their project. yes i have been working with the client for over 6months already this is the first time they cant pay. but its coming up to 3months without payment. surely the NDA and contract are null and void if they cannot fulfill their end by making payments?
    – K-G
    Mar 23, 2015 at 18:03
  • i have updated the question with more information,
    – K-G
    Mar 23, 2015 at 18:17
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    An NDA is a non-disclosure agreement. It's related to whether or not you can tell other people about the project you are working on, not whether or not the client pays you.
    – David
    Mar 23, 2015 at 18:28
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    From a I-can't-legally-give-you-advice standpoint, an NDA does not become invalidated based on payment, and violating it may likely bring legal action against yourself.
    – Chris Forrence
    Mar 23, 2015 at 18:37

4 Answers 4

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You have an NDA with the client. Do you have a written contract regarding assignment of rights, payment terms, cancellation fees, late payments (and interest/surchages/late fees)?

If they have not paid on the contract terms, they are in breach of contract (if you have a contract). However, you don't want to breach the contract as well.

Small claims court is a recourse. You should consult with a lawyer.

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    Actually, a contract cannot be breached by you if the client has done so first, however, there are steps required to properly notify your client. Please consult a lawyer and provide a copy of the contract that was signed by the client.
    – Mike Beeler
    May 17, 2015 at 4:58
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I don't even understand what all the fuss is about. Here in CA, small claims cost $50 to file. What are you waiting for, a kick in the behind? Being in business is not about being "nice" -- your client should be your prime example of that. File a small claim, and get your money. Hopefully your deliverables are severable, or you're working hourly -- and if so, give them their stuff back and move on.

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I would give them a hard date (less than a week IMO) you will stop showing up unless they are paid in full. File a small claim immediately after that if they don't pay.

I would absolutely NOT confiscate any property they have. Return it and get somebody to sign off that you returned it. If you keep it they will bring this up in court and you will likely loose your judgement. Or you'll get counter-sued for the equipment you kept.

Good luck.

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Don't make justice yourself. Don't keep the assets (except those you possibly need for the project). Respect the NDA (you can't void it). Deliver any outstanding work package that has been paid.

Then suspend any work, demand payment and claim damages by registered post (preceded by a mail notice).

This should not prevent you from amicably asking for explanations and negotiating other exit solutions than the legal one, but you need to show your firm intents.

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