PA Mech Eng

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Mar 31, 2021
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5
I'll make this as brief as possible, so I'm leaving out a fair bit of detail, but this is a pretty sizable mess, I think...

I run a small industrial machine design and building business, focusing on the mechanical aspects of the equipment. I was contacted about a year ago (through a former co-worker) by a machine controls business who wanted to expand into industrial robotics, a field in which I have experience, and they do not.

They had one particular client that they asked me to help design a solution for (using a robot to palletize boxes coming off their packaging line, pretty standard stuff). I helped then extensively with this, doing, I believe, the majority of the background and engineering work and handing it off to their salesman. The understanding being that they were handling the sales and controls aspects while I did the mechanical, engineering and machinery aspects when we got the job.

Over the course of the year, the job expanded to replacing most of their packaging line, and again I did all the planning, layout, and engineering work, and handed it off to their salesman for presentation to the client. My work products were used extensively in this effort and early this year we were awarded the job.

In the meantime, they asked me to assist with the design etc. of several other robotic projects that they were trying to get. I was happy to do this as I was repeatedly assured that I would be doing all the mechanical parts of these jobs from this partnership. This amounts to a couple hundred hours of engineering work over the last year.

A few weeks ago we had a planning meeting about this project wherein they announced that they wanted to save money on this project by not testing any of the equipment before installing it on the customer’s floor. In this industry, something like this is just not done; you ALWAYS test before you put it in front of the customer especially a project as complex as this had become. I objected and said they were creating tremendous risk, but they said they could save a lot of money by not testing. So, their customer, their decision… I left it at that.

The following week I was supposed to go with their salesman to one of their existing customers to look at a machine that needed a rebuild. This was mysteriously cancelled, which I didn't think much of at the time.

Fast forward a week, so about a week before the first invoice for my part of the first project was due, I received a derogatory text, questioning my integrity concerning the no-testing decision, from their salesman that was "intended" for the owner. The salesman visited my shop the next afternoon ostensibly to apologize, but instead arguing, vigorously, that the text was somehow not derogatory, and was just taken out of context. I asked him to send me the exculpatory context texts and he committed to doing so.

The owner of the other company called the next morning demanding to have a meeting and I declined until either he, or his employee, fulfilled the obligation and send me the context, as I could not speak on even footing without all the relevant facts. He then emailed a threat to cancel the entire relationship unless I called him immediately, to which I replied that I would be happy to meet with him after I (you guessed it) read the context.

Later that afternoon (this was a friday) the owner of the other company and I agreed to meet at my office on Monday to discuss this, (by this point, he would have had time to delete anything damaging, so by then the texts were moot.) but I received an email Sunday morning indicating that they were ending the relationship immediately, citing my (supposed) willingness to walk away from the project over seeing some texts

For a sense of scale, I approximate their overall sale on this job was about $8 or $900,000, of which close to $200,000 was my work, $300,000 was cost of OEM equipment, and $3, to $400,000 was their profit. - My estimate only as I was not privy to their final quotations, but I did specify and price out nearly all the equipment going into the project.

So the question is; do you think there is an avenue to recover compensation for my work on this particular project - and/or compensation for all the work done on all their other projects? They have not said so in writing, but they made it clear they have no intention of paying for anything I’ve done. Is this 'theft of services' in Pennsylvania?

Complicating matter:
They subcontracted one small machine rebuild job to me 2 months ago. The job is currently about 90% done. They want the machine back immediately and have indicated (verbally) that they will not pay the remaining 50% owed on the rebuild (about $3,500).

Their first payment went over 30 days past due, and it was not until I mentioned that their job was on credit hold pending payment that they finally sent the first 50% down payment. This is the only billing history I have with them.

would you insist on COD payment for the machine? If there is no promising legal recourse, would you bill them for any of professional services on all the other projects, and retain the machine until they paid?
 

djbaxter

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I would personally be inclined to keep the machine until I had the fees deposited in my bank account and verified by the bank as valid (no NSF or anything like that on their side).

But it seems to me you need some legal advice and that should be your starting point.
 

VirtualGlobalPhone

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PA Mech Eng ,

Probably this is a classic example of Working IN the business and Working ON the business.

This happens when consultant keeps doing thinking all is and will be ok. He / she will be taken care. But when the time passes the one who employed feel the entire past was a crap and they dump. The reason is there are other in line spending same time all again!!!

Most of the time client will not know head or tile of the technology, they think like its a click of mouse how NASA sending Satellite to orbit.

So good start is a POC along with is agreement, payment terms etc.

Like djbaxter suggested see what legal option you can have locally. Make sure you understand how deep is the law and your chances of getting what you lost before.

Best wishes.
 

PA Mech Eng

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Mar 31, 2021
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5
The 'client' was consistently happy with my work and kept coming back for more. Everything was really positive until I voiced objection to their decision to not test any of the equipment, but even after that they still had me go with them to the customer's pant to do layout and planning work.

I've spoken to two commercial/business lawyers so far, both were uninterested (that's too complicated for us)

The immediate question is: Is it legal for me to hold their machine until I get paid, or am I risking legal action against me for doing so?

How would you handle this?
 

VirtualGlobalPhone

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If you have signed an agreement to supply and support you will have to. Even if you are not the law its own way to protect a business. In the same way law will also protect the seller.

Law simply interpret the way lawyer put forth the case. Is it not ?

The best way is to talk it out. Bring a "Compromise and Fairness" as the term of mutual agreement. It always works....
 

Dora Wi

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Aug 19, 2020
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One thing is not clear to me: did you sign a contract with the company before you started working on this? Ideally there should be a contract which details each party's rights and obligations which should serve as the basis of issues like this.
If there's no contract, you should look up local laws that apply regarding whether you can withhold the product, even if you can't consult a lawyer, these should be available on the internet (though I'm from a different country, so I'm not sure). If possible, I would not give it to them until they pay, either. And try pushing until you find a lawyer to consult - from an ethical standpoint this is absolutely theft of services, and the whole thing sounds very sketchy so it would be worth finding out where the law stands on this.
 

PA Mech Eng

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Mar 31, 2021
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5
OK, so I've spoken to an attorney - and I have a second opinion scheduled for early next week - this is the reader's digest version...

1. If the other party is willing to pay for the machine, I cannot hold onto it, regardless of whatever else they may owe me. I can demand COD, but other than that, if they pay, it goes.

2. I should have had all parties sign an agreement at the onset, but hey, we all knew that.

3. Early on in the process, I sent them an estimate of what the first project would cost. That document included my hourly rate for a number of items listed. From that point on, anything they ask me to do - knowing my hourly rate - constituted an implicit contract, and is recoverable. As the lawyer put it, once they have my hourly rate, and they continue asking me to do work for them, they have reasonable expectation that they will have to pay for that work.

4. This would have been easier with a written agreement.
 
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