Delayed Payment ConcernsOften Give Rise to Legal Challenges and Business Relationship DifficultiesWhat to Do When Your Client Fails to Provide Payment

In these modern times there are numerous and varied types of businesses be it the standard storefront or service business or newer more innovative telephone and internet business and product orders and as such it is not unusual to have outstanding invoices and receivables.  Like any business whether old school or new it is not unusual to have outstanding receivables or bad debts the key to any business is to avoid them.

The best way to try and avoid receivable problems is to ensure your agreement with the client is in writing specifying in your agreement what you are providing, the costs, the time in which it will be provided subject to factors outside your control and the terms when on which payment will be accepted including interest rates resulting from delays in payment.  It should also be remembered in these days of emails and Facebook that email addresses and Facebook pages are not sufficient as contact addresses for Court documents if payments are not made so it is important that you obtain both company and personal addresses in any contract or dealings with customers.

If for any reason you have not confirmed a written agreement and/or your contact with the client is online or by telephone the process for the collection of monies properly due and owing for the provision of materials and services can be confusing.  However it is not too late and the old saying of “a verbal contract is not worth the paper it is written on”, is in fact a fallacy not a rule.  The Courts have and will enforce oral agreements as outlined in the case of Schrempf v. Willchuk, 2013 ONSC 2863 (CanLII) which states:

[5]  On the first issue of whether an oral agreement existed, in Picavet v. Clute, 2012 CarswellOnt 4575 (ON S.C.), Healey J.  at para.  9 summarized that where there is no written contract documenting the alleged agreement “the court must examine everything occurring between the two parties that is relevant to the alleged agreement in order to decide whether a contract exists.”

[6]  Paragraph 15 of the decision of Cavarzan J.  in Summers v. Sawyer, 2005 CarswellOnt 4001 (ON S.C.), provides as follows with respect to binding oral agreements:

Whether or not a binding oral agreement was formed in the circumstances here is a question which engages what has been called the objective principle of contract formation.  As stated in S.M.  Waddams, The Law of Contracts (5th Edition) at p.  103:

The principle function of the law of contracts is to protect reasonable expectations engendered by promises.

In addition to the enforcement of an oral agreement the Courts will enforce what is known as a claim for unjust enrichment or quantum meriut which is a fancy latin phrase essentially meaning you are entitled to be paid for what you have earned or provided as outlined in the case of Goulimis Construction Ltd.  v. Jason Smith, Eva Klein and Bank of Montreal, 2014 ONSC 1239 (CanLII)  which states:

[41]  The courts generally will grant recovery on the basis of quantum meruit where a party supplies services and materials to another at their request, encouragement or acquiescence, whether under a quasi-contract or no contract, and where it would be unjust for this other party to retain the benefit.  The court in the above noted Rafal decision reiterated this basic proposition at paragraph 30, again referring to the Fridman text:

Quantum meruit will be available if the services in question were furnished at the request or with the encouragement or acquiescence of the opposing party in circumstances that render it unjust for the opposing party to retain the benefit conferred by the provision of the services: Fridman, Restitution, 2nd ed.  (Toronto: Carswell, 1992 at 290-92; Nicholson v. St.  Denis (1975), 57 C.L.R.  (3d) 699 (Ont.C.A.), leave to appeal to S.C.C.  refused, [1975] 1 S.C.R.  x (S.C.C.).

So, if you find you have outstanding invoices for products or services you have provided we can assist you with your action to collect same, get in touch!

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