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Thread: Client cancelled services and wants deposit back

  1. #1
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    Client cancelled services and wants deposit back

    I was developing a website for a medium sized buisness and after a few weeks
    they cancelled my services. Now they want their deposit back, and I am
    wondering what the laws are regarding deposits for work contracted out.

    The reason that I got a deposit from the client is so that I would still
    recieve pay for my work if they cancelled my services, but they are
    requesting the deposit back as well.

    Has anyone run into this or know where I can find out what the law is
    regarding this?

    I wish that I had a contract that stated the the deposit would be witheld if
    the client no longer desired my services.

    From what I understand, the contract does not have to be in writing unless
    it can't be completely performed within one year of its commencement, a
    contract involving the sale or purchase of real estate, a contract to answer
    for the debt of another person, or a contract involving a sale of goods for
    a price in excess of $500.00
    (http://www.legal-database.com/statute-of-frauds.htm).

    Although it may not need to be in writing, I did not verbally tell the
    client that the deposit would be witheld if he cancelled my services. He did
    know that the money that he gave me was a deposit, but we did not discuss
    wether or not it would be witheld if he cancelled my services. My question
    is, what good is a deposit if it is not witheld if the client cancels the
    work contracted?



    Aaron

    P.S. The client was upset about something that was personal and not
    professional. While we were at a luncheon he requested me to do him a
    personal favor and he did not think that I satisfied his request. It had
    nothing to do with the work I was doing for him, but he threatened to pull
    out anyways and so he did. He later stated that he pulled out because he did
    not think I was very professional and said that he could not trust my
    buisness skills. He never did give me a better answer than that.

    Would you happen to know where I can find out what the going hourly rate is
    for web development in California?

  2. #2
    tell me, is this sellable..... OddDog's Avatar
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    independantly of legal issues I would recomend that you calculate the work you have done already, and return the difference to the client.

  3. #3
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    Originally posted by OddDog
    independantly of legal issues I would recomend that you calculate the work you have done already, and return the difference to the client.
    And you also might want to calculate that amount of money compared to the time/money you'll spend if they take you to court. Most of my "medium-sized" clients already have lawyers. If that's the case here, they can be ready to sue you at the drop of a hat while you scramble just to find a good attorney.

  4. #4
    Old Member gecko2's Avatar
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    Re: Client cancelled services and wants deposit back

    Originally posted by innovations
    The client was upset about something that was personal and not professional. While we were at a luncheon he requested me to do him a personal favor and he did not think that I satisfied his request. It had nothing to do with the work I was doing for him, but he threatened to pull
    out anyways and so he did. He later stated that he pulled out because he did not think I was very professional and said that he could not trust my buisness skills. He never did give me a better answer than that.
    Tell us, tell us, tell us!

    Keep the deposit, tell him a deposit is supposed to cover in the eventuality of what exactly happened.
    Keep it rural.

  5. #5
    tell me, is this sellable..... OddDog's Avatar
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    my way still leaves open the give it all back if the client gets really bully about it ...

  6. #6
    FK'n Elitist Super Mod EVPohovich's Avatar
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    Re: Client cancelled services and wants deposit back

    Originally posted by innovations
    Would you happen to know where I can find out what the going hourly rate is
    for web development in California?
    Depends on your area.....but $30 - $60 per hour.

    Next time you should write out a contract, and state that you are collecting a "Non-Refundable Deposit". It is all in the wording. As a fellow Californian you should know that by now.

    As far as what is going on now, you may have to refund the deposit. Sorry, but hard lessons are the ones fastest learned.

    Good luck!

  7. #7
    Senior Member SouthShore's Avatar
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    possession is 90% of the law. what else is a deposit for? keep the money.
    www.Southshoregraphics.com
    Web Design > Flash > Logos > Vector
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  8. #8
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    I calculated my time by hour ($50 x 38 hours) and told the client that I would give him back $200 (keeping $1,800 of the original deposit).

    He said he would think about it and then called me the next day and stated that he was not interested in recieving the $200. He was under the impression that I was trying to milk him of all that he had and I think that by offering a refund I persuaded him otherwise (at least enough for him to stop harassesing me).

    I will definately use contracts from here forward - thanks for all of the help!

  9. #9
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    Always hard to have any rights if you don't have a written contract.

    The client would be paying you for a job done - a completed website. Unless you have it spelt out to him clearly that about a "non-refundable deposit", or even that cancellation would result in a certain payment for time worked, legally I don't really think you have a leg to stand on.

    There might be some local law that says otherwise, but generally that would be where you stand.
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  10. #10
    FK'n Elitist Super Mod EVPohovich's Avatar
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    Well it's good to hear that you didn't have too much trouble resolving you problem.

    As stated earlier, ALWAYS get it in writing. It is also a god idea to take a class, or even just pick up a book, on contract writing. Thay are not as hard to draw up as some make them out to be.

  11. #11
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    It's a shame no one has taken the time to create a "developer's" website (almost like a writer's union, in a sense), in which we can show sample contracts to those who are in need.

    Of course, most of our current contracts are confidential, so we couldn't display them. But I've been in the business a long time, and I've got a filing cabinet full of contracts with companies that no longer exist, or have been bought out by giants who no longer remember the subsidiary.

    I suppose the downside would be that someone would pick an elegant contract designed for a $1,000,000 job written for the laws of Florida, while they are doing a job in California for $500 (a 100-page overkill). Also, state laws differ significantly (I discovered that on a contract with a company in Seattle, in which I had to sue, and the legal fees cost over $30,000 alone....I was happy to settle for $35,000, thinking I would take home $5,000, but my attorney had other "fees" that ate up the balance....two years of woe, legal hell, and all I got out of it was a lunch.)

    The best way to learn about contracts is through the school of hard knocks. Writing contracts is an art form in and of itself, so it pays to copy the best, especially if you could give a hooey about becoming a famous contract lawyer.

    Personally, I love California contracts, most (but not all) begin with:


    WITNESSETH
    ...now state your reasons

    WHEREAS
    ....now state your where-as's

    GRANT
    ....now get the goodies

    WARRANTIES AND INDEMNIFICATIONS
    ....cover your ass

    REMEDIES
    ....this gives you and exact amount of time to settle the problems.

    FORCE MAJEURE
    ....pay particular attention, this can sink your ship. This is the part, too, where God can send down lightning and fry your computers, and it's all your fault because you are a wicked person...

    APPENDICES
    In real life, an appendix is useless. Not in a contract. This is usually the deliverables. Pay particular attention.

    SIGNATURE
    Finally, there is the signature section, which is most important, because it contains the tax-payer ID or social security number or whatever your country uses. This is the final arbiter, because no matter which direction the contract goes, the government will get its cut. Don't forget that. Governments hate people who don't pay taxes.

    Like I said, a contract can be a "deal memo" of one page, or an elegant work of art running on for 100 pages or more.

    The longer you stay in the game, the more examples you will have in your filing cabinet of what to undertake, and what *NOT* to undertake.....

    Also, keep in mind who (or is that whom?) you are dealing with. Get a contract from a book publisher, and you can probably take it to the bank. Book publishers are, in my experience, the most honorable of people. They tend to be educated, I guess, and they read books. On the other hand, deal with a small businees like "Mama's Lingerie and Body Oil Shoppe" or a used-car dealership, well, don't act surprised when it blows up.

    Use common sense. You can undertake a $500,000 job on the basis of a 2-page "deal memo" (containing a "we agree to agree") if you sense the company is honorable, but you might want to refuse the $250 job from the drop-in guy who has this "special" formula for a fertilizer that will make millions if only he had a web site....(does that sound like the voice of experience to you?)

    Regards,

    Rob W
    Last edited by RWWarren; 11-17-2004 at 01:04 AM.

  12. #12
    Moderator RazoRmedia's Avatar
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    what was the favour?

    oh, and keep the money, thats the whole point of a deposit but make sure they have the work you have done up to date. send the the fla's as well and you're both quits.

  13. #13
    FK'n Elitist Super Mod EVPohovich's Avatar
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    RWWarren hit the nail right on the head, and nicely spelled out the basic elements of common contract configuration. Remember that laws DO change from state to state, and you really need to do your homework for international contracts as well.
    Use common sense. You can undertake a $500,000 job on the basis of a 2-page "deal memo" (containing a "we agree to agree") if you sense the company is honorable, but you might want to refuse the $250 job from the drop-in guy who has this "special" formula for a fertilizer that will make millions if only he had a web site....(does that sound like the voice of experience to you?)
    I think everyone (well, most everyone) has a deal that they have "learned something from", some may be harder and cost more, and others get a slap on the wrist (lucky SOBs). Doing the proper research can limit this liability in the long run, and can provide much needed experience dealing with future companies. I mayself have learned a few 'interesting' negotiation tactics from contract writing and the homework/research involved.

    I know it is a cliche' but learning something new everyday never hurts. And the only dumb question is the one that is never asked.

  14. #14
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    bad news

    The client requested proof that the pictures I used in the website design are royalty-free and was not satisfied that they are royalty-free after I gave him the registration information that came with the images.

    The guy seems to really want to find someting whereby he can bring a charge against me.

    I noticed that even when buying something from istock photo they do not give you any proof information that could be presented to a client.

    What is customary in this regard?

  15. #15
    Flashkit historian Frets's Avatar
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    In a civil matter the onus is upon the plantiff
    to provide evidence that the defendant is at fault

    The defendant can choose to defend his position or
    not and let the body of proof be on the plantiff

    Which means He's trying to gather evidence against you.
    Or just intimidate you into believing he is.

    He will try to prove that the images are not royalty free.
    If he can't do that he'll try to prove that you did not
    provide him with adequate proof that they were royalty free.
    and withheld information. If he fails at either he now has
    access to the images so he can design with them and put you
    out of the picture.
    Anything you send to him in future I would suggest you
    send via registered mail.

    I would strongly suggest you.
    Document everything you've done
    Hire a lawyer. if you can't ask for a pro bono.
    Anything that he requests of you send to your lawyer
    first then upon approval send registered mail to
    the firm in question.

  16. #16
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    Originally posted by TheOriginalFlashDavo
    Always hard to have any rights if you don't have a written contract.

    The client would be paying you for a job done - a completed website. Unless you have it spelt out to him clearly that about a "non-refundable deposit", or even that cancellation would result in a certain payment for time worked, legally I don't really think you have a leg to stand on.

    There might be some local law that says otherwise, but generally that would be where you stand.
    In my opinion, Dave is actually the most accurate here of the arguments I have read. You unfortunately lack a contract and so it would be a question of law as to whether this was even a "deposit" by definition. If so, you are caught dealing with an issue of showing that the deposit was necessary and voluntary... at the same time by very definition, deposits are to be returned to the bailor (in some form or fashion...by service or refund). You will be forced to justify the services were indeed rendered, that the value is real and the court will make the decision in the end.

    Truth is... This is less than $5K... So, you will end up in Small Claims and therefore an attorney won't be able to represent you in court. Also, I disagree with the notion to hire an attorney on this one specifically. $2000 won't get you much legal support. Also, absent a contract, you have an oral agreement. Most importantly, you have no recourse to sue for attorney fees in an oral agreement situation.

    My advice. Learn from this situation. Call him up and try to reach a negotiated settlement. Document the agreement in writting or even an e-mail will suffice here. Otherwise, he could take you to small claims and the time and effort of defending your priciples just impedes your ability to make money with someone else.

    For what it's worth...
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    http://www.2advanced.com/

  17. #17
    Freelance or Bust thodya's Avatar
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    Send him a cheque for the $200 difference, and a CD with all your work on it, including source.

    As someone else said, the deposit was towards a complete website. Unless you state in writing that it's non-refundable then it's not worth the hassle of fighting it.

    However, you were commissioned to do work, and you started on that work in good faith, so you deserve compensation. Keep your $1800, send him a receipt for it X hours work, and call it a day.

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