Daniel at Civico raises an issue that faces business owners time again about payment for work not delivered as required and what the legal position is. In this blog I have sat down with our commercial litigation expert at Cobbetts, Adam Forster, and set out some of the key considerations that business owners must know to understand where they stand legally in these circumstances.

As a starting point, if you have a written contract you need to look at its terms carefully – remember, this may incorporate standard terms and conditions of one of the parties. Depending on the wording of the contract, you may only have to pay if the contractor has completed all of the work. In Daniel’s case, if the contract does say this Civico would not have to pay any part of the price.

However, be aware that:

1.If you have agreed payments for distinct stages of the work, then the contractor may be able to recover some money for the work he has done, even though he has not fulfilled his obligations entirely. This is because each stage is treated like a separate contract and the completion of each stage gives rise to the right to payment.

2. If you accepted that the contractor would be allowed to partially perform his obligations, then the contractor could bring a claim against you on a quantum meruit (us lawyers love to throw in the odd latin phrase) basis – this means he can seek a reasonable sum for the work he has done.

3. If there is an event outside the control of the parties which has made it impossible to perform the contract, then there is no breach of contract, as the contract comes to an end at the time of the event and the parties do not have to perform future obligations. Accordingly, the contractor would be under no obligation to deliver the work and, equally, you would be under no obligation to pay for it.

Whatever the legal position however the parties have to consider any future working relationship. It may be that you want to maintain a relationship with this contractor for future projects and therefore consider that it is appropriate to pay the contractor for the invoiced amount in order to preserve good relations.

Alternatively, depending on the nature of the relationship, you may find that you can negotiate a payment, on a without prejudice basis, which is less than the invoiced amount and which both parties think is fair.

It is also important to bear in mind that even if there isn’t a formal written contract and a legal contractual relationship can still exist through oral agreement or course of dealing. So the facts surrounding your relationship may also have some bearing on the legal position.

Kevin and Cliff keep posing us lawyers some interesting questions. The idea of Soshi using music industry agents in the US makes sense from a financial viewpoint but is also a great tool to help them tap right into a key network. However, experience of dealing with US agents confirms that they are right to be cautious.

As ever the Soshi guys have found a clever way of tackling their financial challenges of engaging employees at the early stages of their business by using the willing volunteers across the gaming community.By doing this Soshi get the expertise they need while also providing invaluable real world experience for talented graduates to build their CV.  However, what looks like a win-win for all involved can quickly turn into a legal minefield.

Cliff and Kevin at Soshi games are certainly thinking of innovative ways to get people to engage with their latest games, and by identifying with rock-star imagery I think they have got the beginnings of a great hook. However, after speaking with our Intellectual Property expert at Cobbetts, Frances Anderson, I now understand that using the branding of famous personalities without permission can be dangerous.