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Is a company obligated to pay for services received if they intentionally withhold fulfulling their end of an agreement?

Frisco, TX |

Can a company withhold payment for retained consultant services rendered if a time frame was not blatantly stated in the agreement? Eventhough the agreement fee was agreed upon the time frame conversations and email discussions prior to signing an agreement. Especially if they deceitfully and intentionally don't hold up to their end of the agreement by purposely not communicating, providing feedback, responding or taking action after interviews to allow a person to fulfill their end in a timely manner.

They say because a time frame was not specifically stated in the agreement they don't have to pay me the balance for services rendered or candidates they may hire. And can make me pay back the retainer fee because they have not filled the positions yet. I requested payment which is stated due upon receipt because they have not shown integrity towards the agreement or services rendered. And stated they could hire any of the candidates forwarded at no additional payment to me if they dissolved the agreement because of their actions.

Example: An original fee and discussion was based on four positions taking 30 days to fill at a higher rate. But as discussed my services could fill the roles in two weeks and the fee was assessed at a lower rate with a retainer fee payment on this time frame to build an initial relationship of trust for payment and services between both parties. I was assured by the manager that I would be paid. I kept my end of the agreement by forwarding qualified candidates to be interviewed for hire for the agreed upon roles. Afterwards the manager intentionally is not filling the positions or forwarding communication, responding to move forward with hires after expressing interest in hiring the candidates supplied for the roles in the agreement.

Even continued deviating and changing the original roles and requirements from the original agreement while trying to hire the candidates in other positions. And when an additional fee was discussed to be assessed per the agreement that this would be done for additional positions. He would not hire the candidates but contacted them saying they were still interested. And would then request additional qualifed candidates again and again for the original positions. It has been well over the two weeks and 30 days and they have yet to hire a candidate they showed interest in and the candidate was interested as well.

Attorney Answers 2

Posted

You may have something here worthy of pursuit, but more info is needed. Use caution when chasing down customers.

The implied covenant of good faith and fair dealing is an inherent provision in every contract, even if not spelled out in writing. The covenant requires parties to act in good faith and act fairly when dealing with counter parties. Its violation arises when one party manufacturers the circumstances where the other party can do nothing but breach the agreement (the breaching party cannot perform until the other party acts first).

This argument may or may not be applicable directly to your circumstances, but it's worthy of further examination. The terms of contract which create the obligation to pay you need to be carefully reviewed to understand whether there is a no-fault failure to perform the obligation of paying you, and the facts should be further evaluated to determine whether your client used reasonable efforts in furtherance of the agreement, but the results didn't pan out creating no obligation to pay you.

Be advised that getting tough with customers has to be done diplomatically, as you could get a reputation as a person not-so-great to engage because of your inclination to bring lawsuits and dispute issues. A fair work-out with your client should be considered so as to extend the relationship and give you the opportunity to gain new business from the client, but payment-in-advance next time. Also, consider revising the conditions in your retainer agreement which give rise to your payment and retention of your retainer without recourse from your customers.

Good luck.

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3 comments

Brian W. Erikson

Brian W. Erikson

Posted

There is no implied duty of good faith in performing a contract in Texas. The Texas Supreme Court so held in English v. Fischer, 660 S.W.2d 521 (Tex. 1983), where it refused to hold that “in every contract there is an implied covenant that neither party will do anything which injures the right of the other party to receive benefits of the agreement.”

Ryan Steve Alexander

Ryan Steve Alexander

Posted

Thanks for your comment colleague, although I'm not sure you clearly understand the applicability of current case law, nor the implications of such posturing. I'm also not sure that our banter will add color or benefit a person seeking answers in this forum, but in the defense of my honor, please accept the following response: Colleague - The covenant is back and being argued with better-than-fair success in Texas, but not in all contexts, at least not yet. English v. Fischer is a 1983 case, and has sense been eroded to the point to question its applicability in all circumstances, even those relatively similar to English’s application. See E.R. Dupuis Concrete Co. v. Penn Mutual Life Insurance Company, 137 S.W.3d 311, 1464-Eight, Ltd. v. Joppich, 154 S.W.3d 101, The Universal Life Insurance Company, AIA Services Corporation, and AIA Insurance, Inc. v. Ida M. Giles, 982 SW2d 488, Viles v Security National Insurance Co., 788 S.W.2d 566. Seemingly, there is also a higher standard of proof, whereby bad faith is more than mere negligence or unreasonable conduct, but proof of improper motive or willful ignorance of the facts. If some one is manufacturing a breach whereby they refuse to perform their obligation which is implicit for additional obligations to become due, there is a strong presumption that an improper motive is present, someone doesn’t want to honor payment under contract when all obligations of the obligee are satisfied. I hope this helps you in your efforts.

Brian W. Erikson

Brian W. Erikson

Posted

There is no insurance involved in the questioner's situation. Texas Insurance Code article 21.21 is not at issue. Since insurance has been deemed to be a contract of adhesion, the courts and article 21.21 impose on insurance companies an obligation of good faith. But, again, insurance is not involved. I cited the English v. Fischer case to show that it is long standing Texas law. The Texas Supreme Court renewed it's holding of no general duty of contractural good faith in City of Midland v. O'Bryant, 18 S.W.3d 209, 215 (Tex. 2000). In that case, the Supreme Court stated that it has "specifically rejected the implication of a general duty of good faith and fair dealing in all contracts.". See also, Crim Truck & Tractor Co. v. Navistar Int'l Transp. Corp., 823 S.W.2d 591, 595, n. 5 (Tex. 1993). Texas law is just not the same as California law. That is why I don't try to answer California questions.

Posted

Your fact situation calls for a sit down with an attorney with you bringing your agreement, and the pertinent communications. The other side's position does not seem reasonable, but I would have to see the documents to provide an intelligent assessment.

In general, if a specific time is not specified, and time is not declared to be of the essence, the party obligated to undertake performance can do so within a reasonable time. How much time is reasonable depends on the particular circumstances.

Since you are in the Dallas area, you may wish to take advantage of my free hour of consultation for new clients. If you make an appointment, please bring copies of your pertinent paperwork.

Good luck.

Hope this helps. If you think this post was helpful, please click the best answer tab below and/or designate my answer as the best answer. Thanks.

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