Paid-when-paid contract - Reasonable Time 10

[ME27272727]

Hello. I'm a self-employed consulting engineer. In the building design and construction world, many contracts are typically "paid-when-paid" terms, with some wording stating that invoices will be paid in a "reasonable time-frame" to circumvent payment protection laws. I'm looking for opinions and experience on what constitutes a "reasonable" time-frame. 30 days? 6 months? A year? It's a good, reputable client of mine that is starting to approach 6 months past due on a big invoice (big for me anyway). It's always fun trying to strike a balance between maintaining good relationships while not being a push-over !

 

[TheTick]

I can see I was out of my element here. It's a civil matter (but still seems criminal to me).

 

[glass99]

I had a DDC invoice rejected (one of many)because our time cards are printed last name, first name but the payroll abstract was submitted first name, last name. Their explanation: "How do we know it's really the same person?" Of course, this was after we had submitted numerous invoices that way.

Classic DDC. And how many days after receiving this indecipherable mess of an invoice did they realize they couldn't pay?

 

[glass99]

also re: pay when paid: it's not an entirely unreasonable thing in the context of a poorly funded prime consultant (i.e. a typical architect) paying a subconsultant, but there are two logical points that get missed often:
1. There is increased risk of the sub not getting paid, and they should charge extra for this risk
2. The prime needs to chase the money owed to the sub, even when they have tension in areas not related to the sub. This can especially difficult with additional services.

 

[gte447f]

2. The prime needs to chase the money owed to the sub, even when they have tension in areas not related to the sub. This can especially difficult with additional services.

glass99, Your point above is a major problem with pay when paid in my opinion. Subconsultants have to trust and rely on the prime consultant to chase the money, or basically act in the sub's best interest as the sub's agent. The problem is, their priorities and interests may not be aligned with yours. This is why I think it is fair and important to negotiate a suspension of services clause that allows the sub to stop work after a certain amount of time even if the contract is pay when paid. This allows the sub to agree to share the risk of non-payment with the prime by agreeing to pay when paid, but also maintains the sub's right to manage its own risk by essentially capping the amount of work you are willing to risk for non-payment. This provides leverage on projects that last for several months, but not for projects with a quick turnaround.

 

[glass99]

@gte447f: people writing agreements sometimes live this fantasy world where the sub's money is just a strict pass through with no complicating factors. And it actually is like maybe half the time. I have had some of the most stressful situations of my professional life where an architect won't or can't confront an owner on my behalf when there is an issue. It brings decades long relationships to their knees.

In the case of architects, they want to be in charge of paying me because they want control. But then they don't want to deal with the responsibility.

Yes agreed that stopping work for slow payment is essential. I also push for direct agreements with owners (and am successful in doing so in the last few projects).