Client is being extremely slow with final payments

Question

I have a contract with a local, small town that calls for a 50% payment in advance and full payment on completion after inspection. The inspection was done 2 months ago and I have still not been paid for the first piece of work I completed for them.

I am working on a second project and have received my advance for it (although they took a while to get around to it). The contract, which they had drawn up, clearly called for down payment on the contract day which was June 6th. I was not paid until July 10th after I had already begun preparation work; furthermore, there is/was an agreement that the work be done this year.

Is it right for me to consider the contract voided for these late payments? I am considering stopping work and sending them a letter stating that they have voided the contract, and that I will not consider commencing work again until I am paid in full for both jobs in advance.

I would also like a 10% gratuity for the extra work I have done that was not in the original contract with them. How should I approach this?

Answer 1

If you need this work, then continue working and bug them to pay you the second half.

If, however, you don't need the work, then you do not have to work this job, and you have other clients. I would inform them that you would like them to pay you by a given date at the latest. After that date, you will stop work on the 2nd mural.

As you can see, it all depends upon your position and how you can behave. The established person would do the second step, while a new guy would go for the first approach. After all, you have a signed contract, and you can always sue them.

Answer 2

I have been in this position before, what you need to learn from this is you should always enforce a due date for payments.

In your contract you should mention that when payment is not receive on time client will be charged a late payment fee.

Then at this point you will be able to consider the contract voided.

Always be precise in your contracts.

Answer 3

I have done a lot of projects, both government and private, over the last 30 years and here is an axiomatic way of looking at things. Government contracts are slow pay, but sure pay. Private contracts are quick pay, but not necessarily sure pay.

There have been State contracts I have had that have paid 90 days after they were due. They ALWAYS have paid, though, without exception.

Contrast that with private contracts. Some have stiffed me altogether, and others have "shorted" my final pay. Most have paid as agreed, though.

My advice with any contract is to develop the relationship, and once they are used to seeing you around and feel a connection to you, they are far less likely to delay payment.

There is also nothing wrong with being pleasantly persistent about getting paid. (Keep bugging them!)

As to the "gratuity", you are probably not going to get that, unless it is in the contract. In this industry, you HAVE to make a contract detailing exactly what you are going to do. If they want more, then they have to authorize a VPO to authorize the other work. If you do not get them to sign off on a VPO, then the extra work is being done for free. This can actually be a good approach for later negotiations. By the way, the client wanting you to do extra work for the same amount of money is nothing new, and it is called "Scope Creep". You really have to proactively defend against this and get a policy in place.

EDIT: VPO stands for Variance Purchase Order. All it means is that the client has asked you to do something that was not part of the original agreement, and is agreeing to pay you $x for the extra work.