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Contractor Doctor: Does signing a new contract after one goes cold put me in breach?

Dear Contractor Doctor

I signed a new contract with an agency to begin on 2nd July. One week later the agency informed me there were delays and the start date was now moving "towards the end of July".

I explained this was not on and that I would start searching and take another opportunity if it arose. A second agency then offered me a contract. Before signing anything, I emailed the original agency asking for an update, but got no reply, so accepted the new contract. Now the first agency claims I am in breach of contract.

Does signing a second contract after accepting the first one which went cold put me in breach of contract?



Contractor Doctor says:

“It is the agency that was in breach of contract, at the point when the agent told the contractor that his start date was not actually going to be the start date,” explains Roger Sinclair of contractor legal specialist Egos.

“The agent was effectively saying that ‘we may have a contract but we have no intention of honouring it’. The contractor then did the right thing in trying to find a replacement contract. At the first hint that an agency might be unable to honour a contract, contractors should start looking elsewhere, and tell the agency that’s what they are doing. That’s exactly what Michael did in this case.”

No intention to honour a contract is a breach

According to Sinclair, a party to a contract can breach a contract just by saying they will not honour it: “If by words and actions a party conveys a clear indication that it does not consider itself to be bound by the contract, then that party is in breach.

“In fact, it is such a significant breach of contract that the consequence may well be to lose the right to consider the other party to be still bound by the contract.”

If by words and actions a party conveys a clear indication that it does not consider itself to be bound by the contract, then that party is in breach

Roger Sinclair, Egos

Sinclair highlights that the agency did not say ‘we’ll pay you anyway’, which may have signalled that it intended to honour the contract. It simply said that the start date would not be what was agreed in the contract, which was stating that it would not honour the contract.

Has the contractor waived the right to treat the agency’s actions as a breach?

Sinclair notes that you can have a situation where one party is in breach of the contract, but the other party through its actions has waived the right to treat the first party’s actions as a breach.

“The contractor’s response to the agency was to confirm that if other opportunities arose, he might consider them,” continues Sinclair, “and implicit in that response was ‘and I may accept them’. These are not the actions of a contractor waiving his right to treating the agency’s behaviour as a breach.”

The contractor said he would look for other work, and he did. The clear implication was that he might accept another contract, and he did. Once the contractor received the offer from the second agency, he tried to clarify the situation with the original agency, but did not receive a response. The agency has no grounds for action.

“All too often, contractors are signed up by agencies prematurely, before the agency has actually signed up the client,” adds Sinclair.

He concludes: “Contractors should always ask the agent to confirm that they have got the client to sign up unconditionally. Don’t sign a contract and don’t stop looking for work until the agency has expressly confirmed this.”

Published: 31 July 2013

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