Your customer isn't paying: can you stop work?
Practical tips to reduce unpaid invoices — and to decide when to escalate.
A customer owes you two invoices. You are halfway through the engagement. There is still work ahead of you, and you are starting to wonder why you are continuing.
The question comes up every week in business owners' groups, and the answers there are remarkably uniform: cut off their access, hold the files, keep the website hostage until they pay. It is satisfying to read. It is also the most efficient way to go from creditor to defendant.
Quebec law does give you leverage. It is called the exception for non-performance, and it is more constrained than the forums suggest.
The principle
The exception for non-performance allows a party to a contract to suspend performance of its own obligation where the other party is not performing theirs.
It is a right of contractual self-help. You do not need the court's authorization. You do not need to sue first. You simply stop performing, and you resume when the other side performs.
But it is exercised at your own risk. Nobody validates your decision at the moment you take it. If a judge later concludes the conditions were not met, you are the party in default — with the damages that follow.
The three conditions, and they are cumulative
1. The other party had to perform first, or at the same time
You cannot suspend if your obligation came first in the agreed order.
This is the most frequent trap, and it plays out in your own terms of sale. If your contract says “net 30 after delivery”, payment comes after. You must deliver, then claim. You cannot withhold delivery by invoking a payment default that has not yet occurred.
Conversely, if you bill in stages and payment of stage 2 conditions the start of stage 3, the customer is in default first, and suspension becomes available.
2. What was not performed must be important
A minor failure does not justify stopping everything. If your customer owes $1,200 on an $85,000 engagement and has paid the rest on time, suspending all work is disproportionate. If they have paid nothing in four months, importance is no longer arguable. Between the two it is a question of fact, and a court decides it — after the event.
3. The two obligations must be correlative
The obligation you suspend must be the one that corresponds to the obligation that was not performed. They must be part of the same exchange.
In other words: you cannot suspend contract A because the customer has not paid contract B. Two separate engagements with the same customer remain two engagements. The temptation is strong when it is the same contact and the same company; the law looks at the contracts.
What goes wrong in practice
Holding what is not yours. Keeping a website live but inaccessible, locking an account, retaining files the customer has already paid for, withholding their own data: that is no longer suspending your obligation, it is exercising control over someone else's property. That is a different legal question — the right of retention — with its own rules, which the exception for non-performance does not replace.
Suspending without saying so. Going quiet, slowing down discreetly, letting the file drift. If you are exercising a right, exercise it openly: a written notice stating which obligation you are suspending, why, and what has to happen for you to resume. Silence reads as default; a notice reads as the exercise of a right.
Announcing termination when you meant suspension. These are two different things. Suspending means stopping while you wait. Terminating means ending. A badly drafted email announcing the end of the contract, when all you wanted was a pause, can be held against you.
The price of getting it wrong
This is the part the forums leave out. If you suspend and the conditions were not met, you are the party in default. Your customer can claim the damages your stoppage caused: the cost of having someone else finish the work, losses from the delay, sometimes more.
And more costly still: your $18,000 receivable, which was clear and easy to prove, becomes a contested matter with a counterclaim facing it. You move from a collection file to a piece of litigation. The two do not cost the same or last the same.
The sequence that works
- Reread your contract. The question is not “does he owe me money” but “was his payment due before my obligation”. The answer is in your terms of sale.
- Measure importance. What percentage of the contract is unpaid, for how long, and is the customer disputing or simply not paying?
- Confirm it is the same contract. Not the same customer: the same contract.
- Put them in default first. A written notice demanding payment, setting a reasonable deadline, and stating what will happen when it expires. This step costs little and changes a great deal: it documents your good faith, it gives the customer a chance to pay, and in many cases it resolves the file without any suspension.
- Suspend in writing, precisely: which obligation, from when, and what must happen for you to resume.
And for the next contract
The real solution is upstream. A contract that expressly makes payment of each stage a condition of starting the next, and that sets out your right to suspend on default, spares you the entire analysis above. You are no longer exercising a general right with fuzzy edges: you are applying a clause. It is half a page to add to your terms of sale. It is worth more than any advice from a forum.