Am I required to provide a refund to a customer who changed their mind after paying and entering a verbal agreement?
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Am I required to provide a refund to a customer who changed their mind after paying and entering a verbal agreement?
I am a handyman in Arkansas. I was
contacted by a woman in Delaware who
purchased a house here and wanted it
painted before she move’s here. I gave
her a bid, she accepted, and submitted
full payment for the job. I informed
her of the start date and finish date
and all was well. Materials and
equipment has already been purchased
and are on site. Prep work has already
begun, but no paint has actually been
applied yet. At 200 A.M. this morning
I receive a text message asking for a
refund because the customer wants her
home painted by a ‘professional’ and
not just a ‘voice on the phone.’ I
informed her that I am a professional
and the quality of my work speaks for
itself, and that work had already begun
and I’m already out time and money on
the job, but she persists in demanding
a refund. She said I could deduct the
paint and any other materials, but all
I want to do is just finish the job.
Is she in breach of the verbal
agreement, or do I have to return the
payment less expenses?
Asked on April 1, 2017 under Business Law, Arkansas
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
There is no right to cancel a contract--including an oral one--unless the agreement itself contained a cancellation, early termination, or refund provision. So you do not legally have to return the payment less materials costs. What you would have to do if she refuses to allow you to paint is to return the payment less costs already paid and less your reasonably expected profit (when the other side breaches a contract, you are legally entitled tothe profit you would have made)--i.e. return any costs not incurred.
For example: say you charged her $4,000. Say the paint, materials, etc. cost $800. Say to get the job done, you would normally hire other workers who will cost you a total of $1,200--but now you don't have to. And say that during a job, you'd normally incur $500 of miscellenous expenses (purchasing any new supplies, tools, etc. that break, run out, or you discover you need; plus gas and other transportation)--which now you won't.
So your profit would normally have $4,000 - $800 - $1,200 - $500, or $4,000 - $2,500 = $1,500. You can keep your proft, and you can keep the $800 already spent on supplies, etc., or $2,300. You would return the $1,700 in costs you will not have to incur if she doesn't let you work.
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