FN-FORUM: What can I do about a terminated contract?

date posted 26th July 2007 13:41

Hi all,

I'd appreciate some advice about a situation that I think is about to
arise over a contract with a customer.

My wife and I have been working through our ltd company for a number of
years as consultants to a public sector organisation. All of the work has
done has been under fixed-price contracts directly with the organisation
(i.e. not via an agency). The contract values have been based on a number
of consultant days anticipated for the work, but they do not specifically
pay for our time.

Recently they have had some sort of reorganisation and a few weeks ago
sent us a terse email message asking us to suspend work pending an
internal review. Since then we have had nothing from them despite a fair
bit of prodding. I believe that they may be intending to close down the
project and hence I can expect the contract to terminate. The project was
four months in with another four months to run, and was performing well
(i.e. any possible closure could not in my view be ascribed to project
performance).

My question is, do we have a leg to stand on in terms of asking for
payment following the point at which they put the project on hold, and
also in the event of a contract termination?

1. They had asked us previously to provide them with regular consultancy
throughout the project amounting to 2.5 days per week. Can I insist on
them paying us that amount from the time the work was suspended to now?
After all, they could have asked us to resume work at any point (still
could, in fact), so we have not been in a position to take on other work
to make up the loss, even in the remote event of finding other work at
that notice.
2. The termination section in the contract requires them to give us one
month's written notice of termination, but doesn't specifically mention
payment in lieu of notice: am I able to ask them to pay one month's worth
of the consultancy input they asked us to do?

It is an annoying situation: we have turned down or not applied for other
consultancy work on the strength of what we thought was definite work
backed by a contract. Is the contract worth anything at all?

Any advice would be welcome.


Annoyed of Watford.