"I was offered a 12 month contract. I wanted 6 but the agency said the Client wanted 12 and that they would 'get them to agree to a rate review after 6 months'. When after the first 6 months I reminded them of this, they said 'no, but we'll be in a strong position on renewal….'"
Is there a contractual commitment on the part of the agency, and if so, what is the extent of that commitment?
I've read your contract. There's nothing in the body of the terms about rate reviews, simply an item in the schedule which says 'Fee Review Period: 6 months after commencement.' There's no other indication of what this was intended to mean.
In the absence of some express definition or other specific legal meaning, words used in a contract have the same meaning as they do in everyday life. According to my Shorter Oxford Dictionary, 'review' means 'the act of looking over something (again), with a view to correction or improvement'. I think the greatest obligation the agency could have had here was to review, no more than that. There is no obligation to actually increase the rate.
It seems the agency has 'reviewed' (ie looked at) the rate, and has told you that there is no increase on offer at the present time. If that's so then it appears that they've done all that the contract required of them.
Even if they hadn't reviewed it, whilst on the face of it this might appear to be a breach of contract, it's nevertheless difficult to see what damages you could be entitled to. The damages to which a party to a contract becomes entitled as a result of the other's breach is such sum as would put him in the position in which he would have been, had there been no breach. Given that the obligation is simply to 'review' and not to increase, it's difficult to see that there is any specific and quantifiable loss resulting from the breach.
In short, I think the basic problem here is that the contractual term itself is pretty meaningless. In fact, it's difficult to write such a term in a way which is truly effective. The major problem is that if a term in a contract is not sufficiently objectively precise as to have a clear meaning, then the term itself risks being void for uncertainty. If the term here had gone on to say '…at a review the parties will attempt to agree a new increased rate' that would still leave us with the problem of lack of certainty. A term which says 'we will try to agree' has no clear and certain objective meaning. Often the best you can do with such a term is to provide that if the parties fail to reach agreement, then either can terminate.
And that, I think, is your only remedy here. There is a term in the contract giving you the right to terminate on one month's notice. There was a time in the industry when most agencies tried to dictate contracts which gave them the right to terminate on one month's notice, without any similar right for the Contractor. There are still a few who do this, but it seems to me that the majority of agencies now recognise that to remain commercially competitive and attract the best Contractors, they have to accept that the Contractor too should have similar rights. No Contractor who values his career and future prospects will terminate a contract early without good cause. But that doesn't mean it's any less important that he should have the right to do so.
This particular contract appears to give the agency the right to claw back from you a maximum of two weeks payments towards the cost of 'familiarising' a replacement contractor for the 'project', if you terminate early for 'unprofessional reasons'. The 'project' is undefined. Two points here: first, they would only be entitled to compensation for expense they actually incur. And secondly, they could only do so where they could show you had terminated for 'unprofessional' reasons. This term is also undefined, and I don't think it is at all clear what it means - we're back to the question of terms in a contract which don't have an objectively clear and certain meaning. But it's for them to show that they have the right to deduct, not for you to prove the opposite. And I find it difficult to see that, on any view, termination on notice where the agency had agreed to review the rate and had failed to do so to your satisfaction could be considered 'unprofessional'.
6th March 1998
I'd really appreciate your feedback on this FAQ - so mail me and tell me what you think of it, if it's been useful to you, or let me know of any specific problem you have where I may be able to help.
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