What a mess can be created when communications with your client are not regular and clear.
Our client is for the purposes of this article an app developer, who had an executed agreement with her client to provide 2 apps for use in the hospitality industry. (She isn’t, but the matter may well soon be before the courts, so we need to disguise the scenario).
We were taking instructions because her client had written to the developer and demanded a full refund of the approximately $80,000 in fees paid to date.
In our initial meeting, we learned that the developer had agreed to create the two apps in 25 weeks for a fixed cost, with milestone payments leading up to a final payment upon completion of the development. The wording in the agreement as to the service to be provided was reasonably clear.
Our developer’s client had however, during the course of the engagement requested changes to the nature of the operation of the apps. The development slowed and the initial estimate of delivery was significantly exceeded. None of the apps are ready to hand over at this stage as being working apps. It is now nearly 18 months since the agreement was executed.
So what went wrong?
Firstly the communication, or rather lack of it.
This is the biggest issue and failure by our client.
She didn’t keep her client informed as to the delays and extra costs which would be incurred resulting from her client’s requests for amendment of the contracted services.
Unfortunately, the emailed communication between the parties is also not clear, or worst still non-existent with respect to the extensions in delivery time and the impact on costs.
Recommendation 1 – make sure you keep your clients regularly informed as to progress and also the consequences of any amendments to the initial contracted scope of works.
Secondly the agreement – our app developer had drafted and arranged the execution of the agreement with her client but hadn’t correctly identified the legal entity with which her firm was contracted. We perhaps can get around that issue however it would have been a lot simpler if she had undertaken an ASIC search – (Cost $9) to determine exactly with which entity her IT company was going to be contracted. The agreements were also a bit of a mess with three different dates referred as being the date of execution.
Recommendation 2 – make sure you know exactly who you are contracting with. Double-check your agreements.
This matter will most likely end up before the courts. Because we don’t have significant written communications between the parties to rely upon to defend our client, the matter will be hard to conclude in our client’s favour. We have a defence but it isn’t as secure as it could be.
If your company is to enter into an important contract and you need advice to ensure that the contract is correctly worded and executed, we can assist. A minimal fee at the start of the engagement may prevent a costly error if the agreement is later disputed.
Book a complimentary 30-minute assessment with a member of Apres Legal’s team.
Disclaimer:
This article is not legal advice and should not be relied upon as legal advice. All articles from Apres Legal are intended to provide informative information. Legislation and case law may have been simplified and/or paraphrased. If you would like legal advice based on your current circumstances, you should contact Apres Legal.