Legal Question in Employment Law in California

I am an engineering consultant in the semiconductor field. I specialized in the design of integrated circuits.

Recently, I have done design work for a company that hired my services. The work order was very specific in terms of deliverables and fixed price amount.

Until I finish negotiating a fixed price for a project with a client, any miscellaneous tasks I take care of are billed at an hourly rate. So I use both compensation structures.

I have a term as part of my contract, mutually signed and acknowledged by initials and signatures, that:

"Should either the Company or the Consultant disengage from the business relationship before a project conclusion is reached, the Company agrees to pay the Consultant for any rendered yet uncompensated services that exist at the point in time. Uncompensated and completed fixed-price milestone deliverables will be paid in full according to the pricing structure of Exhibit C. Uncompensated and partially completed milestone deliverables will be paid on a prorated basis of said milestone pricing, calculated by the Consultant."

The project I was recently engaged with is in progress. However, without notice, the client suddenly decided not to design silicon through contractors, but rather purchase silicon from a vendor instead. At the time the client notified me of this, I had already completed 75% of my "fixed-price design milestones".

The final achievement of a milestone is the delivery of specific intellectual property in a specific form. However, the bulk of the progress is characterized by a non-tangible design process that is highly technical and incomprehensible to those not trained in the art.

It's not certain yet, but I believe it is likely that my client will not pay for the partial work completed. Because of it's intangible nature, I clarified in the contract that the prorated amount billed would be calculated by the consultant (left to the consultant's discretion). The client feels that, despite signing and acknowledging the term of the contract that the invoice is "too expensive" for not receiving tangibles at the time of compensation.

I am not required to show "proof" of partial work completed, by wording of the contract, but I offered a few samples of my design work to the client to show that the effort and design process were in place. Regardless, I have a feeling the client, who has a history of late payments, is going to try to ignore the invoices I said, or at best, try to bargain me down.

By the wording of this term in the contract, I'd like to know if I have a decent case to sue for nonpayment, and recover the balance owed as well as legal costs, if it comes down to that.

Thanks so much for your advice!

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