When you render services for a client, you have entered into a contract with that client. A contract is a legally binding verbal or written agreement between two or more parties. You agree to perform a service or provide goods under certain terms and conditions, and in exchange, you expect your client will pay for those goods and services. So what happens if a client refuses to pay? Technically, they are in breach of contract, and you have several options of recourse you can take.
Usually, the first course of action is to send a Notice of Non-Payment. Perhaps the invoice got lost in the mail, or maybe your client simply forgot. A simple reminder may be all that is needed. If still left unpaid, you may consider sending another notice or calling the client. If no payment is received, you may want to send a Letter of Intent that states that you will begin collections proceedings if payment is not received. Damaged credit may incentivize someone who has been dragging their feet with money owed.
If a client disputes the amount owed, you can consider offering an apology or a discount. Taking a slight loss maybe be worth avoiding other more time-consuming and costly options.
Other options you can consider are:
- Filing a lawsuit. There are two types of lawsuits that can be filed, small claims and a civil lawsuit. In Ohio, the limit for a small claims lawsuit is $3,000. If you are suing your client for more than the allowable small claims limit, your case will be transferred to a civil court. You are allowed to represent yourself during these proceedings, but it is highly advisable for you to seek counsel. You have a better chance of winning your case with a knowledgeable attorney.
- Hiring a dispute mediator to help you and your client reach a settlement. The mediator listens to both sides and then attempts to resolve the dispute through an agreeable compromise.
- If your contract states such, you may have to enter into binding arbitration. Binding arbitration is similar to a court without a judge. Both sides present their cases, and the arbitrator makes the ruling decision which both sides must abide by.
If you have a client who owes you money or is accusing you of breaching a contract, the corporate lawyers at Hoover Kacyon can provide you an initial consultation to evaluate your case. Contact our office at 330-922-4491 or through our contact page to schedule your initial consultation.