Expert: Peter M. Elliott - 6/24/2004

Question
My husband and I own a small remodeling business.  Recently we did work for a woman remodeling her home.  Trying to keep a long story short, she only paid a small amount of what was do to us, and then continued promising the balance was coming soon.  Soon has not came, so we contacted an attorney who sent her a letter demanding payment.  Today I received a letter saying that she is suing us.  Suddenly she is claiming the work was not good enough.  We do have a signed contract, but how do we refute her claims that the job was done poorly.  Before we started to get her to pay she had repeatly told me how wonderful her house had turned out, and how happy she was.  She even wanted us to do further work.  What do we do now.  What are our chances of winning this?  Thank You!!

Answer
Hi Stefanie

So you have got caught by an unscrupulous client. What to do?  First decide whether or not you can write off this debt against experience, as it may cost more in stress and lawyers than it is worth.  You could sell the debt to a debt collection agency, which might be the cheapest solution.  In any case send an invoice every month to show that the debt is outstanding, so that you do not lose the right to payment.

You have a signed written contract, so at least some things will be clear; the amount of work, the price to be paid, duration etc.  She states that 'the work was not good enough'.  What does this mean?  The comment is inadequate in itself and no justification for withholding payment.  The only comments which matter are whether or not your work is compliant or non-compliant with your contractual obligations.  Your client must justify her opinion in detail and allow you reasonable time to rectify any deficient or defective work.  Address her complaints one by one in an objective manner.  Do not dismiss them as stupid or irrelevant, because she will win, and you will not get paid.  

There are several questions which you have to answer objectively, because the courts work on facts, not emotions.  Were any quality standards included in the contract?  Have you met those standards? If no standards were included, is your work 'fit for purpose'?  Does your work comply with the statutory standards (planning or building regulations), if any?  If the statutory standards do not apply, does your work meet the tolerances and quality accepted as normal within your industry?  Has the client a genuine cause for her comments?  Generally, in the absence of any stated standards, your work has to be of a 'merchantable' quality and 'fit for purpose'.

You may have to prove that you have fulfilled your contract and are due payment.  If you have written notes or other proof of her 'happiness' with your work, they will help your case.  Try to get some photographs of the completed work to prove your case.  In fact in future take a digital camera with you and take 'before' and 'after' photographs of all your work; a real pain archiving and captioning them all, but they could save a lot of argument in future.

If you think that her case is unfounded, then apply for payment through the small claims court, or apply for a mechanic's lien.  Your attorney should have discussed these options with you in the first place.  Have a look on the internet.  There are lots of commercial and federal sites dealing with the subject.

Realistically, this situation comes down to who has the most time to continue the fight.  If you get to a point where you do not have the time or energy to continue, then consider naming and shaming your client by writing an article for your trade magazine, or local paper, on 'the client from hell' as a warning to other members, but keep it factual to avoid any chance of libel.  You may find that others have had a similar experience with the same client!

What are your chances of wining?  I have no idea, as it depends on too many factors, but do not let the stress and worry affect your health, and you will have a greater chance of winning.

Good luck.