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  • Context: web development for a bigcorp via an intermediary sole proprietor, specifically:
  • I have performed contract work for a Client (A), who was doing the sales & PM, and sold it to bigcorp (B)
  • I've secured & been providing the hosting for the resulting sites; we have an agreement with A, that we will bill this to client (B) on a regular basis
  • Despite my explicit requests, he haven't secured a written contract for hosting these
  • Client (A) goes silent for a year
  • As a result, there's now an outstanding 12 months of web hosting bills
  • I've tried: sending invoice (no response), have called him (elusive reply)
  • Site is serving ~300K requests per day; hosting costs are ~$3K per year; outstanding bill is ~$8K

What worries me here greatly, is that I have no contractual obligation (other than verbal agreement), nor current financial incentive to host these (and the bills keep coming). OTOH there is a 30% probability, that keeping this relationship might bring in additional revenue, which might include hosting costs for the above.

I (and only me) have full root access to the server; and also have email correspondence evidencing the above; options I have considered:

  • Getting a legal advisor, escalating collection from A via payment request, going down the small court route
  • Informing bigcorp(B) of outstanding payment; and if fails, pulling the plug.

Other than "getting a contract in writing before doing anything else for clients", what, specifically, would you recommend doing about this case?

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Your approach is 100% wrong. You've been way too nice. $8,000? I wouldn't wait a single day more before pulling the plug. If your client (A) wanted to get your invoice paid, it'd be paid by now. Bigcorp (B) probably has no clue.

I wouldn't rule out the chance that someone with client (A) has taken a nice holiday worth about $8,000, and has been on the beach someplace with a mai tai (and a little umbrella in it!) laughing about your invoices. You've been running your business like a charity -- or actually, you've let your client run your business because by waiting this long, you've trained the client to know that your priority isn't to be financially solvent, but instead to be a nice guy.

I can't vouch for the UK, but here in the US, verbal agreements are legally enforceable. You might research this to clarify but I'd guess there is some similar legal remedy.

I would disable the web server (temporarily) and wait for the telephone to ring -- it will! Demand payment within 7-15 calendar days, and if you don't get paid, cancel the hosting account as (1) you are not legally bound to bigcorp and (2) client is in breach. If you do get paid, get your money and leave this client ALONE. Hand over the responsibility for the hosting, and get on with your life. It's not worth the headache.

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I wouldn't directly pull the plug.

I'd contact BigCorp about the situation, inform them that Intermediary failed to pay and that you will have to pull the plug. BigCorp likely pays more than 8000 on a yearly basis to the intermediary and has much more leverage. And based on the character you sketch, Intermediary probably hasn't informed them about the due payments, and they are unaware of the situation.

If you're lucky, they might even drop the intermediary and directly do business with you in the future because you informed them of their problem even though it's not technically your obligation. If you can save them from their (potential) crisis they'll appreciate it, and they'll be reconsidering the Intermediary.

Of course, don't wait another 12 months! Give BigCorp a day or two to respond and a week or so to handle the situation from their end (either paying directly or pressuring the Intermediary). For you, the difference between 51 and 52 isn't that much, but for them the difference is literally no time, or a week to solve a big problem.

edit: I wouldn't (initially) mention the time to BigCorp. If they ask, don't lie, but if they don't exactly know your current fee for the hosting, you might be able to strike a slightly better deal if they choose to trade directly with you.

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I you have not yet threatened to pull the plug, you must do so. It is the only leverage you seem to have.

Send a harshly worded letter stating they have one week to pay and secure a contract for further services. If they do not comply, the plug will be pulled at a stated time.

Since there are no contractual obligations, it seems you need not involve lawyers. My only reservation would be legal action from them, as pulling the plug seemingly will cost them money. In addition, you have perhaps accepted the situation for so long, that the client could claim that the provided hosting was part of the payment they already had made.

If you do pull he plug, prepare yourself for potential nastiness. Good luck.

  • 1
    I don't know why you waited so long. I would definitely pull the plug, that is ridiculous. – Jessica Termini Apr 6 '16 at 7:06

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