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Fixed price contract cancelled by client - escrow release.

Community Guru
Federico D Member Since: Sep 21, 2015
1 of 31

I would like feed-back from people who have had this experience please.

 

I am in a dispute with a client. I did a first milestone for a fixed price, it was completed, delivered and the client released the funds (he was happy). Then he deposited money in Escrow for milestone 2. As I was carrying out the work on milestone 2, I delivered to him reports and/or work I had been carrying out. He was aware of it. He then cancelled the milestone, before I could complete it, and asked for the whole amount in escrow to be returned to him. I said I wanted the proportion of the work, I carried out in the milestone, paid and the rest could be returned to him. It has gone into a dispute.

 

My main question is about what the support team told me which I do not believe: if the milestone is cancelled, the whole amount in escrow is returned to the client. This would be unacceptable in any business transaction in the outside world. In fact, there I would ask for the whole amount to be paid to me as it was a mutual commitment. They referred me to the terms of work but there I found that this was only the case if the freelancer cancelled the job.

 

Who is right?

Community Guru
Will L Member Since: Jul 9, 2015
2 of 31

It isn't about "right." Federico.

 

It's about what's easiest and least expensive for Upwork to administer.

 

Upwork can't afford to adjudicate every potential conflict between clients and freelancers, so there are some hard rules about how certain things are done on Upwork that are absolute and non-negotiable. This is one of them.

 

Not that it's much help to you now, but this is why I break down the very few fixed price jobs I do into multiple milestones with the largest milestones first. And why I formally submit the work on a milestone before it is 100% complete, telling the client as part of the submission what I think remains to be done to complete that milestone. That starts the 14-day time clock and gives the (honest) client plenty of time to review and revise before releasing payment. It's harder for a client to avoid payment on a funded milestone once work has been submitted under it.

 

 

Community Guru
Richard W Member Since: Jun 22, 2017
3 of 31

Will L wrote:

It's harder for a client to avoid payment on a funded milestone once work has been submitted under it.


Is it? I'm not sure that's true. What's to stop a client requesting changes and then closing the contract? Or even closing the contract without requesting changes? I could be wrong, but I suspect that in either case the freelancer will receive the same "refund or dispute" message that they would have received if they hadn't submitted the work.

Community Guru
Will L Member Since: Jul 9, 2015
4 of 31

I don't know, Richard.

 

Perhaps someone who works for Upwork or our non-paid Upwork experts here can perfectly answer that question.

Community Guru
Petra R Member Since: Aug 3, 2011
5 of 31

Richard W wrote:

Will L wrote:

It's harder for a client to avoid payment on a funded milestone once work has been submitted under it.


Is it? I'm not sure that's true.


It isn't.


What's more, cutting a contract in lots of milestone is no protection either, because clients can dispute the entire contract, all 67 milestones, including the 66 approved and paid ones if they like, as long as they dispute within 30 days of the last one being charged.

Community Guru
Richard W Member Since: Jun 22, 2017
6 of 31

Well, perhaps there's one advantage to having already submitted the work when the client cancels. If the case goes to arbitration you'd have irrefutable proof that you'd already done the work before the client cancelled, and so the arbitrator may be more likely to award you the full escrow. (But from what I've read here, if it gets that far, the freelancer usually wins anyway.)

 

ETA. ...and that might strengthen your negotiating position during mediation.

Community Guru
Richard W Member Since: Jun 22, 2017
7 of 31

Petra R wrote:


What's more, cutting a contract in lots of milestone is no protection either, because clients can dispute the entire contract, all 67 milestones, including the 66 approved and paid ones if they like, as long as they dispute within 30 days of the last one being charged.


Petra, in this situation is the onus still on the freelancer to pay for arbitration (because the client wins by default if neither party pays for arbitration)?

Community Guru
Petra R Member Since: Aug 3, 2011
8 of 31

Richard W wrote:

Petra R wrote:


What's more, cutting a contract in lots of milestone is no protection either, because clients can dispute the entire contract, all 67 milestones, including the 66 approved and paid ones if they like, as long as they dispute within 30 days of the last one being charged.


Petra, in this situation is the onus still on the freelancer to pay for arbitration (because the client wins by default if neither party pays for arbitration)?


In this case the freelancer either pays for arbitration, agrees to the request, or gets suspended.

 

Community Guru
Federico D Member Since: Sep 21, 2015
9 of 31

Will L wrote:

It isn't about "right." Federico.

 

It's about what's easiest and least expensive for Upwork to administer.

 

Upwork can't afford to adjudicate every potential conflict between clients and freelancers, so there are some hard rules about how certain things are done on Upwork that are absolute and non-negotiable. This is one of them.

 

Not that it's much help to you now, but this is why I break down the very few fixed price jobs I do into multiple milestones with the largest milestones first. And why I formally submit the work on a milestone before it is 100% complete, telling the client as part of the submission what I think remains to be done to complete that milestone. That starts the 14-day time clock and gives the (honest) client plenty of time to review and revise before releasing payment. It's harder for a client to avoid payment on a funded milestone once work has been submitted under it.

 

 


I am really talking about the strict 'legality' as per the Upwork terms.

I sincerely doubt what you say works. I do not  know your field, but on mine it will be evident to the client when the milestone is not complete and I guess 90% will say that they cannot release the money before the job is complete. Then they will scream about the 14 day period. 

 

Community Guru
Will L Member Since: Jul 9, 2015
10 of 31

Yes, Federico, each freelancer specialty has its quirks and best payment structure.

 

My projects nearly always have multiple detailed elements, all of which are interconnected - one cannot be completely finished until it is part of the finished whole. I haven't yet had a client who didn't understand that. With so few fixed price projects, I may never have that happen.

 

However, sometimes clients go silent partway through a project, never to be heard from again. By putting the highest value on the earliest milestones the client going AWOL loses me less income. Obviously, that arrangement isn't appropriate for every project. But it typically is for mine.

 

Good luck with this particular client. Please come back to this thread and let us know how it works out for you.

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