'I had been offered an extension to my existing contract in London, but instead accepted an offer of a new position abroad from another agency at a better rate. I signed up for the new one and declined the extension. 4 weeks later - 2 weeks before the new contract was due to start - the agent called and told me he was having some difficulties in getting the 'top man' at the client site to sign up, but assured me this was 'just a formality' and not to worry. 2 days before the contract was due to start, he called again and said the contract was terminated - before it had even started! By this time I had no chance of resurrecting the offered extension on my old contract.'
I find it outrageous that some agencies have working practices which encourage their staff to mislead contractors into signing up before they have any firm degree of commitment from the client. This, clearly, is what has happened here.
I've looked at the contract; in the contract it is clearly stated that 'the Agency has obtained an engagement with the Client for the Contractor'. This is a clear term of the contract, and it is equally clear from what you have told me that this term has been broken - at no time had the agency obtained such a commitment from the Client.
In a claim for damages for breach of contract, the innocent party is entitled to be placed in the position in which he would have been, had the contract been performed. There is, however, a catch.
The agency had the right under the terms of the contract to terminate it by notice on one week's notice during the first four weeks, and four weeks thereafter.
It is clear law where a party to a contract accepts the other's breach as a ground for terminating the contract, if the party at fault could have lawfully terminated the contract early, then the damages will be limited to what the damages would have been if the party at fault had done so. This means that under the law of contract, the damages the agency would be liable to pay for their breach would be limited to one week's earnings under the contract. [Yes, I know the contract says they can only terminate on one week's notice during the first four weeks, and the contract hadn't yet started - but I find it hard to imagine that they would be liable to pay you more by telling you earlier.]
We need to view this a little more laterally, however, and consider the law of misrepresentation - the essence of which is this; where in negotiations leading up to a contract:
then there has been a misrepresentation.
The consequences differ, depending on whether or not the misrepresentation is (a) innocent; (b) negligent (ie careless); or (c) fraudulent - where the party making the representation either knew it was untrue, or deliberately closed his eyes to that possibility.
Here I think it is clear that you have been the victim of a fraudulent misrepresentation - the agency clearly knew that they did not at any stage have the Client signed up, and yet lead you to believe both by what they said to you, and by the express wording of the contract, that they had. The agent acknowledged to you that he had lied.
Unlike a claim for damages for breach of contract, in a claim for damages for fraudulent misrepresentation, the innocent party is entitled to be placed in the position in which he would have been had he not entered the contract - in other words, he's entitled to be placed back where he was in the first place, rather than (as under the law of contact) where he would have been if the contract had been performed. And here, that helps you considerably - because the 'catch' I spoke of above no longer applies.
If you hadn't entered the contract, you would have accepted the offer of extension of your old contract, and would have continued to earn at the rate under that extension.
Once you knew that the new contract would not be proceeding, then you clearly had a duty to try and mitigate your losses - ie, to try and keep them down by doing your best to find another contract as soon as reasonably practicable. Provided you can show that you did this, then you will be entitled to damages from the agency at whatever rate you would have had under the extension, for however long it should have taken you to find another contract.
A couple of endnotes: first, the legal principles do of course work both ways; Contractors who present CVs to agencies which owe more to imagination than truth run the risk of being on the receiving end of such claims themselves from agencies; and secondly, such agencies as we have here may only learn the lessons and clean their acts up when they realise that the cost of handling claims from wronged contractors such as you is more than they stand to gain from such behaviour.
5th February 1999
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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