Client changed request after purchasing hardware. Where do I stand?

[Redgie]

UPDATE 21st November 2012 - All done! http://forums.overclockers.co.uk/showpost.php?p=23210926&postcount=50

UPDATE 8th June 2012 - Anybody want to buy a server ? http://forums.overclockers.co.uk/showpost.php?p=22092830&postcount=50

A few months ago I was introduced to a man running a business in need of some IT support by a relative. I spent time and effort going to the sites of his and assessing everything. My job was to assess a quotation they had been given by another company for a central server and all hardware needed to build a domain system. I produced a better quote and they asked me to do it instead.

I'm only an individual, full time student doing this sort of thing in my spare time, so I asked for a 50% payment (Here comes problem A, I don't know if I said payment, or deposit) which they gave. I then ordered all the parts (Worth more than the 50%) and they arrived. I configured and got everything ready, then tried to contact the company, who were reluctant to answer the phone or respond to emails.

A couple of months later they finally get back to me, asking for a meeting, which I went to yesterday. Now expecting to see the owner and the contact (Nice guy, sort of the middle man type thing), I was surprised to end up in a room with the contact, but instead of the owner, the new residential IT support woman and her note-taker. Why on earth they didn't give the internal IT staff the job in the first place I have no idea.

Anyway, the entire meeting she keeps disagreeing with everything I say, trying to discredit me and keeps insisting that they now want a cloud based system. I then ask what we're going to do with the current hardware, which she then lays claim to, stating that because they've partially paid for it, it is theirs (Obviously not that simply).

Anyway, I want out, the job is getting ridiculous and frankly I don't need the aggro, plus apart from anything it's now a completely different job to the one I originally agreed to, so what I'm planning to do is tell them that I will continue if they want a server system, but if they want a cloud system, I'm out, because even if I did want it, I don't know about cloud systems anyway.

The problem is with what has been purchased, I'm worried that they are going to ask for a refund, because if they do, the hardware is now 4 months old and thus worth less than what I paid for it, so I'd be out of pocket.

Am I right in thinking that because they paid half and agreed to the contract verbally, that they legally have to either pay the rest and have the hardware, or let me keep the 50% as a deposit and the hardware? I need some legal point else they'll just rip me to shreds...

As I say I'm a full time student, the job started small but now it's some huge operation that needs multiple cloud servers (Which I completely disagree with, but that's not the point).

Help is much appreciated!

 

[Redgie]

I have a detailed specification of the system to be put into place and a cashed cheque but that's about it.

 

[Redgie]

Yes, they claim they never received the invoice but I definitely sent it and still have a copy (Not that that will prove much)

 

[Redgie]

Bypass the IT monkeys. Send a letter to the MD explaining the situation rationally. Work out how much you would be out of pocket and request they either implement the system as per the original spec or they reimburse you for the cost you incurred.

Sadly the owner / MD just passes this stuff off to these guys. So doing that would only make the staff more hostile no doubt. He's not really the kind of guy to concern himself with my problems believe me.

And they paid you as invoiced? i.e. The invoice details a deposit and it matches what they paid?

Their payment is of the same amount on the invoice if that's what you mean, yes.

 

[Redgie]

How much is the invoice. Are we talking 2k or a lot more?

Total cost was around 3.5k

Invoice them for the rest and give them the hardware and if they don't pay just keep everything, if everything happened as you explained it.

That's pretty much exactly what I though, just want as much confirmation as possible!

 

[Redgie]

Right guys here's what I've added to the document I'm sending them, just looking for any input on whether it sounds right?

If a cloud based system is taken forward and implemented, there is still an issue of what to do with the current hardware. As it stands the server has been configured and is ready to be setup as a domain controller as was originally planned. If however this is no longer needed one of two things will need to happen.

Option A is that the outstanding balance of £1540.60 be paid. Should this be done all items of hardware will be delivered to <Customer Company> to do with as they wish.

Option B is for <Customer Company> to forfeit their deposit, at which point the hardware will be sold to recoup the outstanding balance. This option will mean that the hardware will remain property of <My Company>.

 

[Redgie]

Don't enter negoiations regarding a cloud system, get them to warrant the current contract. If it is like you say, it's a pretty straight forward case.
Honour the current contract then run away.

That's exactly what I'm doing I want nothing to do with them after this so I'm making it clear in another part of the document that I'll have nothing to do with the cloud system.

Option B sounds like a lot of hassle for you AND being out of pocket.
Neither of which is any of your doing.

Stick to Option A... in fact don't give them an option. Just send the invoice for the outstanding balance as agreed.

Keep it simple..
You agreed this > You owe this.
Not paying? > See you in court.

Interesting point, if I was able to sell all hardware for the initially paid price I would only just reach the same financial outcome as option A. And obviously it's not going to sell for the brand new price...

 

[Redgie]

So after weeks of waiting round for responses, I've had this from them:

Dear <me>,

Thank you for taking the time to detail your thoughts following our meeting in December.

You will recall the funds initially submitted to you where to cover the up front cost of the hardware as you did not have funds available due to your cash flow limitations as a student. These funds were supplied in good faith however a receipt was not produced until we requested one during our meeting in December. This receipt showed the words "Deposit" I would like to state that at no point were we under any impression this was a deposit, we have looked back through your original proposal and can clarify that a deposit was never mentioned.

<My name> we feel that although we appreciate your efforts and believe you did have honourable intentions, your proposal on closer inspection by two independent IT advisors was flawed in many ways from the initial build with several weeks "Stress Testing" which should have only taken a couple of days and only if there were faults on site to the functionality of the server and it's ability to add value to our business now or in future and finally our grave concern regarding ongoing support.

As you have stated (in your notes following our meeting) that the server and IT infrastructure on reflection would not be suitable for for ********* and it's future expansion to the Spa Resort, we would like to request this project be cancelled forthwith. This leaves the matter of hardware already purchased. We assume the server is fully operational as you were able to commence stress testing, bearing this in mind, we would like you to propose a way forward as unfortunately we have no option but to request a refund for the funds supplied to you to support the purchase of hardware.

We realise this will be disappointing for you as indeed it is for us, however we are confident of our findings and as you will appreciate the correct and future proof IT infrastructure of ********* and it's divisions is vital to ensure the smooth running of our business.

Please do not hesitate to contact me if you have any questions.


Kind regards,

********

I'm getting a little bit worried now, there's no way I can refund them the money they gave because it was used to purchase hardware that has now devalued past the amount paid, purely because of the amount of time they've taken to come to a decision.

I certainly recall verbally stating that this was a deposit, but this is not written on a document as such other than the receipt which they claim to have never initially received.

Grumph.

 

[Redgie]

How much did you quote for in the "original proposal" and how much did the receipt say they paid?

The receipt (Or invoice, really) showed a 50% deposit as being paid. The original proposal was for £3081.19 and so the deposit was for £1540.59, with the verbal agreement that the remaining £1540.60 be paid upon completion of the job.

 

[Redgie]

Update for all! After much discussion and bashing about sentences such as "Our legal team" and "According to law XYZ" we have finally come to agreement on a final proposal.

The terms of the deal are that I myself sell all items, for as much as they can fetch. I then take off a fee that has been agreed in advance, and transfer the remaining amount to the customer, minus shipping charges and any fees that are occured.

Some might see this as me losing and giving up (I did also), however the fee that I am receiving, while not as good as the initial profit margin, is enough for me to agree to, and simply brush this whole job under the carpet as a huge lesson in business.

For anyone interested, I am now selling all the items, as per the details in this post, over at: http://forums.overclockers.co.uk/showthread.php?p=22092827

EDIT: Forgot to mention, I made sure to obtain signed and written permission before going ahead with anything this time!

 

[Redgie]

What i would do is see if the original situation can be salvaged.

If it cannot be salvaged, i would then keep the deposit + equipment and not respond to any calls.

This was my intention, however as explained it became an unlikely outcome!

Looks like you got owned in the MM thread too lol...

Indeed

Glad you came to an agreement.

However, 2GB of RAM total for a server aiming at a medium business is woefully inadequate

Ahah, originally it was a 4GB but Dell wanted an unrealistic price, so I set out to order the server and RAM seperately and do the upgrade in a few seconds. Sadly things fell apart before I bought the extra RAM so this became an issue.

 

[Redgie]

Thought I should post back and close this up. As of today the client has accepted a cheque in final settlement to tie of all business between both parties. From my perspective its significantly less than I would have stood to gain should everything have ran smoothly initially. However, it's still money and has ensured I'm not out of pocket, and taught be some valuable experience about contracts!

Anyway, I appreciate the support of the OcUK lot. It's just nice to have the whole thing behind me .