This tip has its genesis in a problem I have experienced in representing both small businesses and individuals that provide services to those small businesses. The problem is that in many occasions there is no complaint about the work that was done until the party that is supposed to pay cannot pay. Either because it simply does not have the funds or has chosen to allocate its funds in a different way. Let me provide you with an example:
Party A makes an independent consulting agreement with Party B in which Party B will develop custom software for Party A. The scope of the relationship and obligations are detailed in an Independent Consulting Agreement that is signed by both parties. The relationship moves along swimmingly until Party A runs into problems paying Party B for its work. The payment problems are solely due to cash flow issues that Party A has. While the parties try to work something out, they are unable to and Party B is forced to file a lawsuit to collect money that it is owed. Party A hires an attorney to respond to the lawsuit and among other things the attorney raises the question of whether Party B properly performed its obligations under the independent consulting agreement. Keep in mind, that this is the first time the issue of Party B’s performance has ever been raised between the parties. Nonetheless, the fact that it is raised requires Party B to spend time and money defending the claims improving its entitlement to money which it should have been paid months before.
I have encountered this situation more times than I care to remember. It occurs to me that there is a way to short-circuit some of these issues if not completely eliminate them.
If you are the party doing the work, but not being paid, ask the party on the other side to agree that the payment problem is solely related an issue with lack of money and it has nothing to do with your work performance. For example, one could e-mail Party A’s representative to clarify that the lack of payment is solely an issue with Party A’s lack of funds and has no relationship to Party B’s obligations under the agreement.
This type of written confirmation will be very powerful during a lawsuit in demonstrating that any issues raised by Party A relating to work performance are likely a sham.
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Oklahoma Business Law