The Law Is A Ass

There are times when I think Dickens had a point. You know, when he said The Law Is A Ass. It sort of makes sense if you’re in business, particularly when you’re looking into contracts.

A contact of mine is in the building trade but only indirectly; it’s actually a family member and he does a lot of the admin, and has sunk some cash into the business. So it’s no use blaming him for any of what follows.

Essentially the business did some work for a client. The client was itself working for another client at the time – we’ll call them Uberclient so we can distinguish between the two. The contact put a new roof on Uberclient’s premises  under the direction of client, and invoiced.

And waited.

And waited.

The invoice has not been paid. Oh dear, says my contact, better write to the client. Client ignores contact. I know, says contact, I’ll ask Uberclient what’s going on.

Uberclient says there has been some issue with the sign-off of the work.

My contact, the quality of whose work is not in question, is understandably narked but not quite certain what to do next. He can take his direct client to the small claims court by all means – if you need to do the same anytime then the paperwork to get you started is here. He knows, however, that his client hasn’t been paid either and he’d rather not get into a dispute.

The really galling thing for him – and remember he’s not the proprietor – is that his family member hadn’t done the diligent thing and found out what he needed to put into the contract about title – that is, the legal ownership of the goods installed. So the roof, which has not been paid for, is legally the property of Uberclient because it’s been installed on the premises. So my contact’s view, that he should just go and remove the roof slates if nobody pays up, is a non-starter. (It also isn’t terribly constructive but we’ll let that pass, he’s under financial stress).

Now, Uberclient is  reputable but a large organisation. There’s no doubt it’ll pay eventually. It’s interesting to note, though, that not one but two smaller businesses are going into difficulties and pain simply because they’ve done the job right. One could speculate that if the contract had been more watertight and the roof remained someone else’s property until paid for then the bill might have been settled earlier.

I mention this anecdote only as an example. I talk to a lot of businesses and very frequently come across those whose finances are in trouble because they didn’t know something about the way contracts work. It’s always worth doing the research in advance – before you get hit.

Guy Clapperton is a freelance journalist who specialises in small business issues and has written for the likes of The Guardian, the FT and the Daily Mirror. Guy has written about finance and franchising for SmallBizPod. http://www.guyclapperton.co.uk