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Hello, We are based in California and a small startup company. We

Customer Question
Hello, We are based in California...
Hello,

We are based in California and a small startup company.

We are basically a Mobile Application Development startup and we agreed with a client to build an App for him. And, we signed two contracts so far.

The client kept changing the requirements and now he is coming up with a new requirement that was not part of the original scope and wants us to develop that - he keeps saying that he has reduced the original scope and wants us to build this new idea.

We did not agree to it and he is pursuing legal action against us saying that we originally didn't do a good job for him and thats why he is changing us to do a new build.

He comes back with all kinds of words saying that we didn't complete, we didn't complete that etc. etc. Though we completed all the items signed in the contract except one pending item.

We would like to ask you - what are our options ? we already paid the developers more than what the customer paid us - now, we cannot afford to hire an advocate to solve this problem. Kindly advise. Your opinion will greatly help cope ourselves.
Submitted: 4 years ago.Category: Business Law
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Answered in 21 minutes by:
6/24/2013
Business Lawyer: Roger, Attorney replied 4 years ago
Roger
Roger, Attorney
Category: Business Law
Satisfied Customers: 31,873
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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Hi - my name is Kirk and I'm a Business litigation attorney. Thanks for your question.

If you have a contract for a specific product to be provided, and if you provided that, then the contract was likely fulfilled. Also, if there were no change orders to modify the agreement, then the changes requested should have required additional payment in order for you to do the extra work that is outside of the original contract. IF there was no change order, it could be a little more difficult seeking payment for this additional work.

Outside of you and the client reaching an agreement to pay you the amount owed, you'll have to sue, and if you're incorporated, you can only sue with an attorney because individuals can't sue on behalf of another person or corporate entity.

You could sue for anything you're due under the original contract, and you can seek payment for the additional work by claiming that it was a request for new work, and you charged them separately.

Other than suing this client, there's likely no way that you will ever recover your money. ALSO, in order for the client to sue you, he will have to prove that you breached the contract - - which will require an objective review of the contract and then what was produced by you. It would be up to a judge to determine whether or not your work complied with the terms of the contract. If so, you'd win, if not, they'd win.

However, the client may be bluffing, and likely should be careful to sue you since you could counter-sue for all of the work that has been done, which is outside of the contract.
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Customer reply replied 4 years ago

Follow up question:


 


Most of the items in the contract were completed. There were a few that we were developing when the customer started changing the scope and sidelined us on completing the remaining items. So, currently there are some pending items that were not completed because of clients change in direction and new requirements popping up. We can complete the pending items, but the customer does not want us to complete those and instead wants us to complete something that is completely out of scope. So should we go ahead and complete the remaining items irrespective of clients objection and push back? Also, we are behind schedule to complete the remaininng items because of reasons mentioned above. There is no specific deadline mentioned in the contract except that the 5%equity payout would be cancelled. Can the client sue us for delay?

Business Lawyer: Roger, Attorney replied 4 years ago
IF there is no specific deadline, then it would be fairly difficult to sue you for delay because there's nothing that says you're required to complete by a certain date.

As for moving forward or changing, it is likely best to get a WRITTEN agreement in place for this new work and have a contract for the specific work you're going to perform. As for the previous work you've done that now isn't wanted, you would still have a right to seek payment for this time IF you did the work at the direction of the client. You may want to try and discount or reduce the fee as part of settlement, but you don't have to.

So, the bottom line is that you have a right to sue for the work thus far, and you also have the right to do the new work, but how you proceed is really up to you. However, a reasonable settlement is to pay you something for the work you have done but now need to discard AND you can also seek payment in full for the new work; but, you can also settle this as you see fit.

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Business Lawyer: Roger, Attorney replied 4 years ago
Hi -

I was checking in to see if you have any additional questions. If so, please let me know and I'll be glad to respond. Thanks.
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Roger
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