I own a web development and online marketing company. Most of the clients that we design websites for are under contract for website hosting and online marketing. These contracts are automatically renewed and require advance notice in writing to cancel. If a client does not pay monthly dues and does not cancel according to the contract, they risk losing their website and domain name. I rarely have problems, but recently a cosmetic surgeon client (most of my clients are plastic surgeons) had an expired credit card and did not provide us with new payment info. After two months of notices without response and phone calls not returned, we removed the website and in its place put up a page that said “WEBSITE DOWN DUE TO NON-PAYMENT AND BREACH OF CONTRACT.” This worked like magic, as the very next day they were faxing over a new form of payment without us even contacting them. My question: did I take a risk or do I have the right to do this ? Since it worked to so well, I would like to know if I can do it again. Perhaps I can warn of this in my contract? It just costs too much to do business if you don’t get paid. Thank you for your advice.
Contracts / Agreements Lawyer
I think your solution is simple and effective. if you wanted to go one step further you could see about reporting them to trade receivable companies like D&B, Experian, Equifax, Transunion.
Regarding your liability. Anyone can sue for anything, whether or not they will win is a different matter.
If you clearly spell out in your terms and conditions that the site will go down after non-payment, that should help mitigate your liability.
Have an attorney review your terms and services.
Don't forget the most important comment by Mr. Schrafel - Have an attorney review your terms and services.
Below is a checklist for legal issues I use for new e-commerce clients.
1. Business entity - Are you going to be a C corp, an LLC or a sole proprietorship?
2. Terms of Service - This is your contract with your visitors and is the most important item for any e-commerce site. A little work here brings big dividends in the future.
4. FTC guidlines - The FTC has been regulating business advertising for almost a century. All of their advertising guidlines apply to e-commerce sites.
5. Domain Name issues? Is your name available. Can you create a Trademark?
6. Trademark - Do you have a brand name free from conflict? Should you start with just common law rights? Should you register the mark, and when?
7. Copyright - If it is on the web, it already belongs to somebody. Did you buy a license for the images you are using? Do you have a DMCA notice on your web site?
8. Do you need a DMCA policy?
9. Web Site security issues?
10. Do you need and have an EIN? You can get that for free.
11. Do you have employees? - If so you need written policies regarding their authority and use of the internet.
12. Do you know the difference between a "browser wrap" and a "click wrap" and which do you need?
When I discuss this list with clients other issues arise. Finally, I always discuss with my clients their need for good accounting services. An accountant's advice as you start up can save you many dollars in tax that you might not save if you wait to speak to an accountant until your first tax return is due.
I hope this list will give you pause to think about those issues for which you might need to seek professional advice.
You may want to discuss your situation with a lawyer in more detail. Most lawyers on Avvo, including myself, offer a free phone consultation.
Andrew M. Jaffe
Attorney at Law
Practice Limited to E-Commerce and Internet Law
This post is provided for general informational purposes only and is not intended to be legal advice specific to you. This general information is not a substitute for the advice of an attorney in your jurisdiction. The attorney client relationship is not established by this post.
I think you are taking an incredible risk.
What happens if the client was unhappy with your work and thought you were in breach? An angry plastic surgeon has a lot more money to hire a much better lawyer than you and a defamation law suit could bankrupt you.
You need to spell out remedies in your agreement.
Furthermore, word of mouth is loud in a small professional group. This might work the first time but if you piss off the wrong people in the community you might find you lose a lot of clients and potential clients.
I think it is a bad idea. Small claims court is easy and reasonably effective.