Q: Is it legal for a company to suspend paying affiliate independent owner operators?
Company A (large limo company)
Company B (small limo company hired by A when they need help)
Company A pays B every 2 weeks with a net 45.
Company A stops paying B for jobs done between 02/1/20-02/16/20 about 10k. With A giving any warning and using the covid crisis as excuse. A says if it pays B it will hurt there company and they might not be able to stay afloat. Is this legal? Company B needs the money aswell to save themselves aswell.
B has worked with A for 5+ years and has always been paid every 2 weeks.
A suspended payments to all the B’s
Saying they need to keep B’s money to stay afloat during covid 19 slowdown/shutdown
A has layed off alot of their own employees but has not completely closed their doors they are still operating.
A: The key to resolution in these types of situations is the initial "mitigation" protocols … in which company A would pay company B … some level of the amount owed. Second issue … is there a written agreement covering how company B is to be paid?
1 user found this answer helpful
A: It isn't a matter of legality; it is a matter of practicality. We are all supposed to keep our promises and when we don't, we may get sued, and will probably get a judgment against us. But then what?
Yours truly, is in the same spot. Before Christmas, many of my clients chose to breach their promise to me, and pay Santa instead. After Christmas, most finally paid. Hopefully, your client will pay too; but keep in mind they are having to decide to pay you, or the rent, the utilities, payroll, etc. You are in a particularly weak position because their business is probably down, and they won't be needing you as much in the future. If they go out of business, a judgment against them will do you little good. Usually, it is best to maintain the relationship and hope for the best.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.