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

UPDATED: Jan 26, 2011

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UPDATED: Jan 26, 2011Fact Checked

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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


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 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.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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