Does a signed work order acknowledge a debt owed?

Nina L. Kaufman, Esq.

Nina L. Kaufman, Esq.

An award-winning small business attorney in New York City, Nina is a sought-after professional speaker and Entrepreneur Magazine online contributor. She is the go-to counsel for knowledge economy and creative companies, delivering legal services and educational resources that save them time, money, and aggravation.

Posted on February 11, 2015 in Business Transactions

Q.:  A work order constitutes an agreement to perform a service. Indebtedness does not occur until the service is performed. So does a signed work order acknowledge an indebtedness?

A.:  A signed work order does not necessarily acknowledge a debt.  The work order simply reflects both sides’ agreement about the work that will be performed.  If you don’t perform the work, the other side is not indebted to you.  If you perform work, but not according to the work order, you may not be able to collect, as you did not provide what the customer wanted (thus, the reason for “change orders”).

As outlined in my legal guide on making clients pay, your work order should include payment provisions or estimates of what the work will cost.  Otherwise, even if you do perform the work – and the work order could serve as evidence of what was ultimately done — you can get into a dispute about the dollar value of the work performed.

Here are more law questions about handling business customers and how to collect money.

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