'I knew I was the lowest paid contractor on the project. The agent had claimed they took a percentage fixed by the client, and that there was no room for reducing their margin. But I've now found out that their margin is 18%, whereas for the other contractors their margin is between 12 & 15% - so it seems clear he lied to me.'
Noone likes to be conned. And finding out you've been conned - particularly where you are a continuing victim of the deception - leaves a nasty taste in the mouth.
The first thing we need to do is to consider your position under the terms of the contract:
1 Does the contract itself say anything about the margin? Unless you negotiated the insertion of such a term yourself (eg saying that the agent warrants that its margin is not more than x%), then the contract is likely to be silent on the subject.
2 Does the contract have a term saying that the document constitutes the entire agreement between you? If so, read it carefully - it may be that the effect of such a term will be that unless something is written in the document, then it will not be a term of the contract.
3 Does the contract have a term by which you acknowledge that you have not entered the contract relying on any representation they may have made to you? If so, again read it carefully and understand what it says.
4 Does the contract expressly prevent you from discussing your rate with the client? Such a term should always ring a warning bell!
Was the size of the agency's margin a contractual term? It would have been if the contract expressly said so; and it could also have been (1) if it had been agreed between you before contract, and (2) if the contract did not contain an 'entire agreement' clause inconsistent with there being any additional oral terms.
If it wasn't a contractual term, then it may still have been a representation inducing you to enter the contract - unless, of course, there was a term saying you had not relied on any representations. But even then, a recent case suggests that even such a term may not be sufficient to let the offending party off the hook for misrepresentations that are fraudulent - ie where the offending party knew at the time that what he was saying was untrue, as may well be the case here.
Either way, you would need to be able to prove exactly what was said. Was there anything in writing (including emails etc)? If not, you may have an uphill struggle, though I don't say it would be impossible. You'd also need to prove a breach of the term / that the representation was untrue - you'd need to prove either that the margin was not fixed by the client, or that it had been fixed, but at a lower level. And if you're basing your case on misrepresentation, you'd also need to show that you relied on the representation when taking your decision to enter the contract, and that had you known the truth, you wouldn't have done so.
You'll need to prove not only what was said, but also that it was untrue. Can you ask the client about it? If there's a term in the contact expressly forbidding you from doing so, then it may be difficult to do this without being in breach of contract yourself. Read the term in the contract carefully and try and find a way of finding out without being in breach of the term - if you come up with the answer you need then I doubt a Court would interpret such a clause too restrictively against you, since to do so would allow the agency to conceal their own deception.
If you can show there was a breach of contract, then you have the right to claim damages, so as to put you in the position in which you would have been, had the contract not been broken - so on the face of it, what you would have got, had the agency charged the margin you were led to believe had been fixed by the client. But it's arguable whether, as a breach of contract, it was a sufficiently serious breach to entitled you to terminate.
If you rely on misrepresentation, you'd be entitled to rescind the contract; your rights to damages are to be placed in the position in which you would have been, had there been no misrepresentation. This may, or may not, amount to the same thing - it's less clear.
What is the client's attitude? If they have imposed a fixed margin, then they may not look too kindly on the agency breaking that agreement with them. But if they haven't, then they may be less interested.
In your position, I'd want to make sure of my facts first, and be sure I could prove them; and once I was sure, I think I'd probably make sure anyone who had a right to know was told - first, the managing director of the agency; and, depending on the response from him/her, maybe then the client.
The lesson is that if you're told something in the negotiations for a contract which you rely on in taking your decision to accept, you should always make sure it's written into the contract - that way, there is far less room for dispute, either about what was said, or about the importance you placed on it. Otherwise you risk finding hat if it's not in writing, it's not worth the paper it's (not) written on!
25th June 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.
[Return to Roger Sinclair's 'Welcome' page]
No liability is accepted for any inaccuracy in the information in these pages - see full disclaimer
© Roger Sinclair egos@cix. co.uk 1999 - All rights reserved - see full copyright details
The information on these pages is provided free and for information only, and is provided 'as is'. Whilst believed to be correct, it is in no way comprehensive. It is provided for your interest only and is not intended to be relied on as formal legal advice. The posting of information on these pages is not intended to create a lawyer-client relationship, and you should not act or rely on this information without seeking professional advice. No liability is accepted therefore for any errors, or for any losses that may be incurred if it is relied on.
You may read these pages on-line, and download them to read later, for your own personal use.
This copyright notice must appear on every page that you print from here.
You must not redistribute these pages or any part of them in any form or medium without first obtaining my consent.
You are welcome to set up links to this website from others.
[Return to Roger Sinclair's 'Welcome' page]