Can a client be awarded a refund just because they didn’t sign a contract on services already performed?

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Can a client be awarded a refund just because they didn’t sign a contract on services already performed?

A client has requested a refund because they decided to hire another company (for reasons unknown). I have been working with this client for 2-weeks via telephone and e-mail. To date, I’ve completed several tasks, including travel. At the time of our meeting the deposit was provided, but stated that they would send the contract. 6 days after that meeting, they cancelled services. Is it required that I provide their deposit since a contract was never signed?

Asked on January 26, 2011 under Business Law, North Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

1) If they made a deposit, then they cancelled without some reason that would permit cancellation and a refund (e.g. you were not able to provide the service they required), you'd have to repay the refund. However, without a proper reason, if they simply chose to cancel, you should be entitled to keep the deposit. A purpose of the deposit, after all, is to discourage them from cancelling and encourage you to begin providing services by ensuring at least partial payment.

2) Without an executed contract, you can't sue them for the amounts they would otherwise have owed under the contract. You are probably limited to the amount of the deposit in terms of the damages or compensation you can recover.

 


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