The Clause



  • I sought and found a new contracting gig on Wall Street. The pay was good, the project appeared to be well thought out and the folks seemed nice. All seemed well.

    Then I got the proposed contract from the agency. Basically, I'd do the work, the client would sign off on a timesheet, I'd submit the timesheet to the agency and the agency would pay me bi-weekly, long in advance of getting paid by the client. To protect themselves from a client-default, they added a clause which essentially said that for a sliding multi-month window, if the client defaulted on any payment to the agency, that I would need to return any monies paid to me for the affected time interval.

    That'd be money on which I would have already paid corporate taxes, corporate and personal payroll taxes, and probably spent some on little things like mortgages and so forth.

    In other words, instead of the usual: my risk is that the agency won't pay me and the agency's risk is that the client won't pay them, the agency was making me assume both risks.

    Ten years ago, it's likely I would have perceived such a clause as something that would never happen, and I would have ignored it. Given the events of the last 2 years, I wound up walking away.

    Given Enron, Bear Stearns, Lehman, GM, Chrysler, Citi, AIG, ..., would you have accepted such a clause?

     



  •  No way in hell. I wouldn't have accepted it 10 or even 20
    years ago. That's a plain ridiculous clause. Good thing you walked
    away from that one.

     Here's hoping you find something more acceptable soon.





  • @DeepThought said:

     No way in hell. ...

    There were a couple of beauties in there too...

    One in particular was that the agency wanted to be named as an "interested party" on my liability insurance.

    Now I can understand your mortgage company being named as an interested party on your home insurance; they have a tangible interest in your property. But, this?

    It was explained that in case I get sued by the client, that they would have first claim on any payouts to "replace billing that would inevitably be lost as a result of the action".

    Say what? Let them get their own insurance!

     



  • Do these agencies use NDAs to keep private the contents of contracts like this? It seems if they were made public other potential contractors wouldn't waste their time and money humoring them...

    Name names!



  • @snoofle said:

    One in particular was that the agency wanted to be named as an "interested party" on my liability insurance.
    I have that when sub-contracting where the main contractor wanted to ensure that my insurance is always paid up. I don't see it as a biggie unless you plan on defaulting on your insurance premium.

    And I am sure that there is this guy in Tennessee that wishes that he hadn't defaulted Firefighters watch as home burns to the ground



  •  Wait. If you're assuming all the liability, then what the hell are they providing?



  • @OzPeter said:

    @snoofle said:
    One in particular was that the agency wanted to be named as an "interested party" on my liability insurance.
    I have that when sub-contracting where the main contractor wanted to ensure that my insurance is always paid up. I don't see it as a biggie unless you plan on defaulting on your insurance premium.

    And I am sure that there is this guy in Tennessee that wishes that he hadn't defaulted Firefighters watch as home burns to the ground

    Proof of insurance would have been a non-issue, as it's a fair request. Getting named as an interested party (insured) is not.

    @tafinucane: no NDA, but this happened just this week - too soon to name names



  • @OzPeter said:

    @snoofle said:
    One in particular was that the agency wanted to be named as an "interested party" on my liability insurance.
    I have that when sub-contracting where the main contractor wanted to ensure that my insurance is always paid up. I don't see it as a biggie unless you plan on defaulting on your insurance premium.

    And I am sure that there is this guy in Tennessee that wishes that he hadn't defaulted Firefighters watch as home burns to the ground

    All the other firefighters were denouncing these guys. It was quite shameful. There's got to be a better way; they just don't care.



  • @fennec said:

    All the other firefighters were denouncing these guys. It was quite shameful. There's got to be a better way; they just don't care.

    But surely this is the ultimate expression of freedom of choice and user pays? And its not just other firefighters denouncing this. I have seen the left denounce the right ("see what capitalism does for you") as well as the right use it to beat on the left ("This is what will happen with Obamacare")

    Maybe this house fire should be a thread in itself - I don't really want to steal the thunder of screwed up contract clauses

    Getting back on track the people I sub-contract to recently asked me to sign a document that relates to one of their clients that I do work for. Basically the client wants to ensure that all people working at their plant acknowledge that they are covered by an NDA. The document I was asked to sign was written as if I was an employee and had me acknowledging a date field that was empty ("you accept the terms as agreed on this date" - where this was blank). The real WTF was that the client had specified an explicit (and different) manner for sub-contractors to acknowledge yet the the idiots asking me to sign couldn't be bothered to follow it. I refused to sign an pointed out a whole host of WTF's as to why I would not. Yet another sub-contractor did sign it.



  •  i understand you don't want the WTF contract, but walking away seems a bit much if the work looks ok.  Why not just work direct with the client? or just send an acceptance with a clause on the basis of the client to pay in advance..........



  • @Helix said:

     i understand you don't want the WTF contract, but walking away seems a bit much if the work looks ok.  Why not just work direct with the client? or just send an acceptance with a clause on the basis of the client to pay in advance..........
     

    Most agents require that the client only use them as an intermediary between them and the contractor, especially if said agent had found the contractor in the first place.

    Sending an acceptance with a clause on the basis the client pays in advance is kind of like me accepting a job offer with a clause on the basis they'll pay me 10% more than their offer. They'll likely simply reject the clause and be back to square-one, not to mention you have to convince both the client and the agent to accept it.

    These kinds of contracts make me wonder how common such a clause is.



  • If the rate was 5% better than I could get elsewhere, and the sliding multi-month window was not too long, then I would probably take the gamble. Taking on greater risk is ok if the risk is clearly defined and you are compensated for the risk.



  • @assorted: the client is a huge bank - no way to set terms there; the agent was adamant about these reimbursement clauses, and the pay was good, but not far from "standard" (at least around here).

    FWIW: the sliding window is nearly 4 months long. Would you agree to give back up to 4 months of earned pay. however unlikely, for any reason?

    IMHO: I subcontract for the agent, not the client. Once I do the work and the client signs off, the agent is on the hook for the pay. I'm not privy to their contract with the client, so whether or not it's honored by the client is between the client and the agent; it's the agents' problem (spelled: r-i-s-k), not mine.

     



  • @OzPeter said:

    @fennec said:
    All the other firefighters were denouncing these guys. It was quite shameful. There's got to be a better way; they just don't care.

    But surely this is the ultimate expression of freedom of choice and user pays?

     

    It wasn't for the people living next door, who paid out but got a second rate service anyway. It does sound a bit like the way fire brigades worked in the 18th Century, though. Isn't progress wonderful?



  •  Four months would be the clincher for me. However, did the contract describe how you were to reimburse the agency? Ten dollars a month?



  • @fennec said:

    @OzPeter said:
    @snoofle said:
    One in particular was that the agency wanted to be named as an "interested party" on my liability insurance.
    I have that when sub-contracting where the main contractor wanted to ensure that my insurance is always paid up. I don't see it as a biggie unless you plan on defaulting on your insurance premium.

    And I am sure that there is this guy in Tennessee that wishes that he hadn't defaulted Firefighters watch as home burns to the ground

    All the other firefighters were denouncing these guys. It was quite shameful. There's got to be a better way; they just don't care.

    Remember the media only reports on things that are unusual. Of the hundreds of thousands of fire departments in the US, one department, just a few guys really, refuse to fight a fire due to unpaid taxes. Percentage-wise, you're more likely to get struck by lightning than have this happen to you.



  • @snoofle said:

    To protect themselves from a client-default, they added a clause which essentially said that for a sliding multi-month window, if the client defaulted on any payment to the agency, that I would need to return any monies paid to me for the affected time interval.

    That'd be money on which I would have already paid corporate taxes, corporate and personal payroll taxes, and probably spent some on little things like mortgages and so forth.

    Wouldn't that technically be a loan?



  • @snoofle said:

    would you have accepted such a clause?
     

    No. 

    I've worked with agencies in the past and  it has always been with the understanding "I work for Agency. They send me to work at other companies but that's irrelevant, Agency contracts me, Agency pays me, whether ot not Agency's customers pay them or not is irrelevant to the contract between Agency and me".

    In my mind, that's why I go through agencies - they take the risk. It's what they are paid to do. Some are paid qhite well to do this (one agency  was paying me 75% of what their customer was paying them, they also took a 10% flat fee of my yearly salary when I transitioned to a fulltime employee of the company).

    B



  • @__moz said:

    @OzPeter said:

    @fennec said:
    All the other firefighters were denouncing these guys. It was quite shameful. There's got to be a better way; they just don't care.

    But surely this is the ultimate expression of freedom of choice and user pays?

     

    It wasn't for the people living next door, who paid out but got a second rate service anyway. It does sound a bit like the way fire brigades worked in the 18th Century, though. Isn't progress wonderful?

    The family whose house burnt down then demanded full compensation from an insurance company whom they had never paid.



  • @blakeyrat said:

    Remember the media only reports on things that are unusual. Of the hundreds of thousands of fire departments in the US, one department, just a few guys really, refuse to fight a fire due to unpaid taxes. Percentage-wise, you're more likely to get struck by lightning than have this happen to you.
     

    What's your point? Whether or not it's a rare occurrance, a town refused to let firefighters do their duties because of a $75 debt. A far better course of action would be to put out the fire and charge the homeowner with a larger fee. The homeowner still needs to pay for the services, yet keeps his home (and pets, by the way, who perished in the flames). Instead, the firefighters and the town let someone's life get destroyed because he failed to cut a check for less than a week's worth of groceries.



  • @RHuckster said:

    @blakeyrat said:

    Remember the media only reports on things that are unusual. Of the hundreds of thousands of fire departments in the US, one department, just a few guys really, refuse to fight a fire due to unpaid taxes. Percentage-wise, you're more likely to get struck by lightning than have this happen to you.
     

    What's your point? Whether or not it's a rare occurrance, a town refused to let firefighters do their duties because of a $75 debt. A far better course of action would be to put out the fire and charge the homeowner with a larger fee. The homeowner still needs to pay for the services, yet keeps his home (and pets, by the way, who perished in the flames). Instead, the firefighters and the town let someone's life get destroyed because he failed to cut a check for less than a week's worth of groceries.

    The firefighters should have paid the fee using the proceeds from their sexy calendar sales.



  • @blakeyrat said:

    The firefighters should have paid the fee using the proceeds from their sexy calendar sales.

    The firefighters should have paid the fee ... to themselves?

    How much did you pay for that calendar?



  • @blakeyrat said:

    The firefighters should have paid the fee using the proceeds from their sexy calendar sales.

    So they let your house burn down if you didn't buy a sexy calendar?



  • @RHuckster said:

    Whether or not it's a rare occurrance, a town refused to let firefighters do their duties because of a $75 debt. A far better course of action would be to put out the fire and charge the homeowner with a larger fee. The homeowner still needs to pay for the services, yet keeps his home (and pets, by the way, who perished in the flames). Instead, the firefighters and the town let someone's life get destroyed because he failed to cut a check for less than a week's worth of groceries.
     

    You should go read the articles.  Start with  http://www.wpsdlocal6.com/news/local/Firefighters-watch-as-home-burns-to-the-ground-104052668.html      Then you will learn

    • The homeowner did not live in the town.  The homeowner lives in rural Tennessee, in a county that is both so rural and so anti-taxes that it does not have a fire department.  On purpose.
    • The nearby town in question, as a favor to the rural residents, offers fire department services to those residents for $75 per year
    • The resident chose not to pay the fee, saying  "I thought they'd come out and put [a fire] out, even if you hadn't paid your $75, but I was wrong,"
    • The fire company used to try to bill after the fact.  Half never paid that either.
    • You can't run a fire department by billing after the fact.  Fire departments need staff, equipment, and training; all of which need to be paid for on an ongoing basis, not on a per-fire basis.



  • This is exactly why such taxes should be mandatory.

    Don't get me wrong, I consider myself a liberal (at least for dutch/european standards) but it is just neccesairy that things like healthcare, safety (firemen, police and the likes) and basic life services should be mandatory. Either through taxes (if provided by public companies) or regulation (if provided by private companies).
    The reasen? Like this story: no (sane) person wants to be denied these services if they need them and it isn't fair for the rest if they do not pay for them and still get them.



  • @dtech said:

    This is exactly why such taxes should be mandatory.

    Don't get me wrong, I consider myself a liberal (at least for dutch/european standards) but it is just neccesairy that things like healthcare, safety (firemen, police and the likes) and basic life services should be mandatory. Either through taxes (if provided by public companies) or regulation (if provided by private companies).
    The reasen? Like this story: no (sane) person wants to be denied these services if they need them and it isn't fair for the rest if they do not pay for them and still get them.

    Yah; you're not in Tennessee. The Redneck State!



  •  @hymie said:

    @RHuckster said:

    Whether or not it's a rare occurrance, a town refused to let firefighters do their duties because of a $75 debt. A far better course of action would be to put out the fire and charge the homeowner with a larger fee. The homeowner still needs to pay for the services, yet keeps his home (and pets, by the way, who perished in the flames). Instead, the firefighters and the town let someone's life get destroyed because he failed to cut a check for less than a week's worth of groceries.
     

    You should go read the articles.  Start with  http://www.wpsdlocal6.com/news/local/Firefighters-watch-as-home-burns-to-the-ground-104052668.html      Then you will learn

    • The homeowner did not live in the town.  The homeowner lives in rural Tennessee, in a county that is both so rural and so anti-taxes that it does not have a fire department.  On purpose.
    • The nearby town in question, as a favor to the rural residents, offers fire department services to those residents for $75 per year
    • The resident chose not to pay the fee, saying  "I thought they'd come out and put [a fire] out, even if you hadn't paid your $75, but I was wrong,"
    • The fire company used to try to bill after the fact.  Half never paid that either.
    • You can't run a fire department by billing after the fact.  Fire departments need staff, equipment, and training; all of which need to be paid for on an ongoing basis, not on a per-fire basis.

    Bingo.  On the surface your heart immediately goes to "those evil firemen, why the hell wouldn't they put it out."  But such arrangements are very common when the home in question is on the corner of No Ave. and Where St.  Once you've run down all the facts, you have some assclown who cheaped out on a $75 per YEAR fee hoping that the firemen would just put it out of the goodness of their hearts and disobeying direct orders of their superiors.  I'm sorry, if I have to pay $75 a year for fire department services OR risk losing my whole damned house, I'll pay the $75.



  • @dtech said:

    This is exactly why such taxes should be mandatory.

    Don't get me wrong, I consider myself a liberal (at least for dutch/european standards) but it is just neccesairy that things like healthcare, safety (firemen, police and the likes) and basic life services should be mandatory. Either through taxes (if provided by public companies) or regulation (if provided by private companies).
    The reasen? Like this story: no (sane) person wants to be denied these services if they need them and it isn't fair for the rest if they do not pay for them and still get them.

     

    Sorry, but if someone is stupid enough to not pay for fire department services, they DESERVE to lose everything they own.  We are a nation of adults for crying out loud, and any sane adult in the world should be able to work out that $75 < gross worth of everything I own.



  • @Faxmachinen said:

    @snoofle said:

    To protect themselves from a client-default, they added a clause which essentially said that for a sliding multi-month window, if the client defaulted on any payment to the agency, that I would need to return any monies paid to me for the affected time interval.

    That'd be money on which I would have already paid corporate taxes, corporate and personal payroll taxes, and probably spent some on little things like mortgages and so forth.

    Wouldn't that technically be a loan?

    I'm not sure if that's even legal.  I don't think you can [b]make[/b] people work for free, at least not in the U.S.  IMHO, If someone does work with the expectation of being paid, they should be paid for it.  Period.


  • @Master Chief said:

    We are a nation of adults for crying out loud

     

    Think of the children!



  • @Master Chief said:

    and any sane adult in the world should be able to work out
     

    Ah, but they don't. Besides, most people are neither sane nor rational.



  • @Master Chief said:

    any sane adult in the world should be able to work out that $75 < gross worth of everything I own.
    Well, except for the billion or so for whom the sign is in fact reversed.

    I agree with you to a large extent that this is something people bring on themselves, but it seems to me that we must be able to come up with a better system if we try. I have to wonder whether the firemen would have come out if someone had been trapped in the burning building. Let's assume they would have done, because the alternative is too horrific to contemplate. That means that this is just about property damage, so this is essentially a dispute over money. It doesn't seem like the most optimally efficient course of action to allow everything someone owns to burn, rather than merely confiscating, say, 75% in exchange for saving it - who benefits directly from the burning? That said, I bet there have been a lot of $75 fees paid to the fire dept since the story broke.



  • @davedavenotdavemaybedave said:

    That said, I bet there have been a lot of $75 fees paid to the fire dept since the story broke.
     

    plus

    - a pretty large group that thought: oh, I need to pay that soon or I'll have a problem, then still didn't actually pay

    - also a group that thought: who needs those bastards, I'll just get a smoke alarm for 39.95.



  • @davedavenotdavemaybedave said:

    It doesn't seem like the most optimally efficient course of action to allow everything someone owns to burn, rather than merely confiscating, say, 75% in exchange for saving it - who benefits directly from the burning? That said, I bet there have been a lot of $75 fees paid to the fire dept since the story broke.

    Likely the insurance doesn't cover it, so if the house burns, the homeowner gets most of the money back, whereas if they pay, it comes out of their pocket. (Although if I was the insurance, I would make a clause that said it is only valid if you pay the $75, but that's beside the point.)



  •  Man, why does every thread have to turn into some off-topic flame war?



  • @PeriSoft said:

     Man, why does every thread have to turn into some off-topic flame war?

    Entropy.

     



  • @Sutherlands said:

    @davedavenotdavemaybedave said:

    It doesn't seem like the most optimally efficient course of action to allow everything someone owns to burn, rather than merely confiscating, say, 75% in exchange for saving it - who benefits directly from the burning? That said, I bet there have been a lot of $75 fees paid to the fire dept since the story broke.

    Likely the insurance doesn't cover it, so if the house burns, the homeowner gets most of the money back, whereas if they pay, it comes out of their pocket. (Although if I was the insurance, I would make a clause that said it is only valid if you pay the $75, but that's beside the point.)
    I'll bet that is still taken as a form of forcing them to pay, so it won't get paid.  I think a more productive option would be to offer fire insurance for $50,000 per year because the town has no fire service (a high risk always translates into high premiums).  Then, offer a discount down to sane rates if the insured provides proof of fire service.



  • @davedavenotdavemaybedave said:

    It doesn't seem like the most optimally efficient course of action to allow everything someone owns to burn, rather than merely confiscating, say, 75% in exchange for saving it - who benefits directly from the burning? That said, I bet there have been a lot of $75 fees paid to the fire dept since the story broke.

    I wonder if there is a market for a private fire department that only charges $70 / year. Only $4000 for a used firetruck. Hmmm.



  • @Rick said:

    I wonder if there is a market for a private fire department that only charges $70 / year. Only $4000 for a used firetruck. Hmmm.

    I doubt $70 per year would work, since the people who won't pay $75 won't pay regardless, but you could probably have charged that guy $10,000 to turn up and put out his fire.



  • @davedavenotdavemaybedave said:

    @Rick said:
    I wonder if there is a market for a private fire department that only charges $70 / year. Only $4000 for a used firetruck. Hmmm.

    I doubt $70 per year would work, since the people who won't pay $75 won't pay regardless, but you could probably have charged that guy $10,000 to turn up and put out his fire.

     

    Yes, I might not get be able to make this business work before the fire, but that that was then. And why would I need to limit myself to cheap customers. Maybe, $70 / year for standard service, $125 / year for express service. And the town doesn't even provide an express service option. I would need to write the EULA very carefully to ensure that heavy bandwidth users couldn't "take advantage". My experience with ISPs is going to be very useful in my new career.



  • @davedavenotdavemaybedave said:

    I doubt $70 per year would work, since the people who won't pay $75 won't pay regardless, but you could probably have charged that guy $10,000 to turn up and put out his fire.
     

    Now that's a business model. Major credit cards and redneck pickup trucks accepted.



  • Having run a consulting company for over 26 years....

     1) No way on the payment clauses. There are two reasons I use an agency... 1) Marketing (aka Preferred Vendors Lists), and 2) Prompt Payment. I actually REQUIRE a clause staating that the agency is solely responsible for payment upon the reciept of a duely signed timesheet. Client can go belly-up, sue me (after signing the timesheet), ANYTHING; I am still going to get paid by the agency.

     2) Insurance (named party). This acutally is standard and viable. There are cases where the client may sue both myself and the agency for work I have done (hasnt happened yet, but is possible). In most cases the agencies insurance would NOT cover the cost of this; so they have the contractor/consultant add them as named insured.

     


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