Consumer Law, Warranties Question about lack of refund clause in contract & implications

[Sara007]

I posted on 7-21 about the release of claims issue, so please refer to that for some additional background. I drafted a release of claims and offered a partial refund to the ex-client despite the fact that under the original contract, there was no mention of a refund and I felt that I had no obligation to issue one, especially as I had delivered a partial work product and needed further information from the ex-client to complete the work and the fact that the ex-client sent me an e-mail terminating my services, specificallly asking me not to send any more documents (a communication that I acknowledged and accepted).

The release of claims and offer of a partial refund that I sent was contingent on the ex-client's signature of the document within 7 days, a period of time that has now passed. I suppose now that if the ex-client wanted to sue me, he could, but what are his chances (or even his grounds) given the facts I mentioned above and in my earlier post? Also, if he comes back to me in another week, month, etc., am I correct in thinking that I would still be under no obligation to refund any money or make any effort to settle? I am not desperate to settle as I feel that given the circumstances, I was more than generous in my offer of a partial refund; however, I had hoped to put the matter behind me. I guess I could ignore any further e-mails/requests from the ex-client as I consider that our working relationship has been terminated. Would appreciate your advice/take on this. Thanks.

 

[Michael Wechsler]

Without more hard to say. But if you offered a partial refund which reflects the unearned portion of the deposit, then it's up to the client to get back to you IMHO. There is no dispute yet.. is there?

 

[dee_dub]

if the ex-client wanted to sue me, he could, but what are his chances (or even his grounds) given the facts I mentioned above and in my earlier post?

His grounds would be that he has fulfilled his obligations under the contract by paying you the stipulated price, but you have breached the contract by not supplying him with the finished product as required. Frankly, that's not a bad starting point.

Your defence is that he terminated the contract and is not entitled to a refund, or breached the contract by not providing you with the information required for you to complete. Maybe there's some other defence I haven't seen yet. Those are not bad either. Personally I like your chances.

Also, if he comes back to me in another week, month, etc., am I correct in thinking that I would still be under no obligation to refund any money or make any effort to settle?

Only the same obligation that any right-thinking person who wants to avoid litigation is under. You are within your rights to tell him he should have accepted your offer if he wanted to settle, and it is no longer on the table.

 

[Sara007]

Thank you, dee_dub for the useful reply. It confirms what I was thinking. I realize that the ex-client could, at some point, take me to small claims court, but frankly the amount of money involved hardly justifies the time and effort, but then again it's my point of view. The other party impulsively terminated my services (and the original contract), and then tried to backtrack when I said I wouldn't provide a full refund.

Going forward, do you have any advice about the kind of refund clause (or "no refund" clause) I should include in future contracts. To date, I haven't had a refund clause in my standard agreement and in 10+ years, have never run into this kind of problem before. Thanks!

 

[Sara007]

Without more hard to say. But if you offered a partial refund which reflects the unearned portion of the deposit, then it's up to the client to get back to you IMHO. There is no dispute yet.. is there?

Thank you, law professor. Yes, I too thought it was up to the client to get back to me. I specified a 7-day time frame for the release of claims and partial refund offer, and there was no reply. To answer your question, yes there is a dispute and the background information for the issue is included in my post of 7-21 (release of claims question in this same forum) as referenced in my original post.

 

[dee_dub]

Going forward, do you have any advice about the kind of refund clause (or "no refund" clause) I should include in future contracts.

Depends what you want the clause to do.

If all you want to say is "once you pay me this, you're not getting it back, no matter what", that's pretty easy. But it's also onerous on the employer and might be a disincentive to potential employers. Maybe you might want to set out that, after certain milestones are reached, certain percentages are non-refundable, and after an entire first draft is rendered, the full amount is non-refundable.

 

[Sara007]

Thanks, dee_dub. I think your suggestion about % refunds and milestones is a good one, and you're right that a "no refund" policy/clause would represent a serious disincentive to my being hired by potential clients. In addition, I also think the contract needs to be more explicit about the client's responsibility regarding delivery of necessary input and information.

Thanks again for all your help and advice.