Cancellation / Value Reduction Fees
Discussion
Back in April, we won a £160k contract with a public sector client (running through until December).
Over the following three months the client pulled back numerous, smaller elements to do themselves.
We have now been informed that the management team made an error in their procurement procedures and that the maximum they can spend with us is £25k. (The contract was won via a 4-way pitch and should have gone to tender. The reason they didn’t was time).
Question is, can we levy a cancellation or value reduction fee?
We’ve billed about £16k on the contract so far.
We do have provision on our T&Cs for this but as we've never had to call on them before, it's a little vague. Just wondering if theirs a legal route to follow.
Cheers
Over the following three months the client pulled back numerous, smaller elements to do themselves.
We have now been informed that the management team made an error in their procurement procedures and that the maximum they can spend with us is £25k. (The contract was won via a 4-way pitch and should have gone to tender. The reason they didn’t was time).
Question is, can we levy a cancellation or value reduction fee?
We’ve billed about £16k on the contract so far.
We do have provision on our T&Cs for this but as we've never had to call on them before, it's a little vague. Just wondering if theirs a legal route to follow.
Cheers
Well that sucks.
Have you done more than 25k worth or work? If yes then you have to consider whether it is worth continuing as a loss leader with the protential for more [profitable] work to follow or start legal proceedings to regain costs.
Secondly, if you haven't done 25k of work, will any outstanding works push you above this figure? In which case can you not do this outstanding work?
To be brutal, it's not your fault that they got their sums wrong. That doesn't mean you'll get your money easily though.
ETA: You may want to check out the termination clauses of the contract too.
Have you done more than 25k worth or work? If yes then you have to consider whether it is worth continuing as a loss leader with the protential for more [profitable] work to follow or start legal proceedings to regain costs.
Secondly, if you haven't done 25k of work, will any outstanding works push you above this figure? In which case can you not do this outstanding work?
To be brutal, it's not your fault that they got their sums wrong. That doesn't mean you'll get your money easily though.
ETA: You may want to check out the termination clauses of the contract too.
Edited by mk1fan on Thursday 4th September 10:47
Gassing Station | Business | Top of Page | What's New | My Stuff