A Trip To The Small Claims Tribunal

Dear members,

Yesterday, I made a trip to the small claims tribunal. It was a claim made against me, for a sum of $4,500. Doesn't sound like a big sum of money, but still, I believe it's an interesting experience that everyone can learn from.

A year ago, I started a small project, offering web hosting services. I custom coded a content management system and bundled it with my hosting service. During christmas, I offered a promotion to setup a site for a one-time fee and waive all future hosting charges, on condition that (1) The project remains profitable and continues to run, OR (2) The customer remains a paying customer (i.e. there must be some paying component).

A year later, I decided to discontinue the project and a disgruntled old man said that I was contractually obligated to continue hosting his site. I would have given him free hosting for an extended period of time, if not for his strong words, saying that I'm contractually bounded to give him free hosting FOREVER.

Sensing that I have an unreasonable customer on hand, I told him that I'm not contractually obligated to him in any way, and would no longer be able to provide hosting for him. That's when he threatened me with the government authorities.

Obviously, he left me in a very awkward position. My options were to (1) give in to his demands and admit that I'm contractually obligated to host his site FOREVER and (2) wait to a court summon. I opted for option 2.

A week later, I received a notice from the Small Claims Tribunal. The old man had gone ahead and filed a claim. At this point, all damage was beyond repair and I told myself that there's no way I'm going to offer him anything else.

At the tribunal, to cut the long story short, I offered him a full 12 months of free hosting out of goodwill for the Courts OR to have $100 refunded to him. Oh, by the way, the deal was for an invoice amount of $216. Can you believe it? For an amount of $216, there could be someone so unreasonable that they would prefer to visit the court 3 times for settlement (2 times mediation, 1 hearing).

The old man rejected both offers. He wanted 3 years free hosting, on grounds that he needed 3 years to find someone to transfer his site for him
I said no, 12 months max. Later, I had enough of him and told him that I offer him $100, take it or leave it. He insisted on having $4,500. The end result, no settlement, we proceeded to the hearing.

At the hearing, the refree was a different person. Again, we had to explain our positions all over. At this point, it is worthy to note that the Small Claims Tribunal is a sub-court that emphasizes heavily on mediation. They would do whatever they can to settle the case without going to a hearing.

During the hearing, I again offered 12 months of free hosting but I already knew that the old man would disagree. He insisted on 3 years. So, no settlement, the hearing began.

Well, the hearing lasted for less than 3 mins. The refree basically dismissed the claim.

I leave it to you to draw your own lessons and conclusions from this little episode. Here's a word of advice, in business, if you sense that you're dealing with an unreasonable person and future complications may arise, sometimes it's better to just walk away.

 

One movie line came to my mind after reading. It goes like "unreasonable men
make life so difficult".

Pardon my dumb question, but did you have a contract that time? Written, an
online one?

Some people don't realize there's no such thing as a lifetime contract.

 

Great story. I enjoyed reading it.

Yes there is.

 

The lesson to be learned is to have a well-defined contract...

 

Okay, I'll grant there can be. But isn't a lifetime contract only as good as the
parties involved are able enforce its terms and what any applicable law says?

Strange things have happened, after all. But I'm just fantasizing.

 

To them it may be, since when they are dead they aren't getting the benefit, but think of freehold estates or trusts. Trusts are probably the best example of a life 'contract' where after the death of A the title will pass to B.


A little different twist but still the same.

 

It's a hosting service,..there's an End User Agreement and no, there wasn't a contract. The refree has dimissed the claim and I hope the matter can be put to rest. It's just silly to make a big "hoo-haa" out of a $216 invoice.

 

Hello projectw3,

Thanks for sharing your story.

I wouldn't have thought that the guy would have pressed the issue enough to actually file with the courts.

It was good the read that you followed through all the way to the end.

 

i bet the guy was used to the 'old days' when you could actually expect EVERYTHING to be EXACTLY just as it says - no advertising twists.

btw: why did you offer free hosting in the first place? send me some this way if you ever do it again!!

 

Well, it was the start of a new project and I wanted to acquire some customers by advertising that the hosting is free, though i made it clear that there must be a paid component. In this case, the paid component is the renewal of domain name. This is not uncommon in the hosting industry. There are reputable hosting companies put there that give away free hosting, emails, etc for domain name registrations.

So Pangea, you don't need me to send you free hosting. You can find some for free, and the paid ones nowadays are so cheap!