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Barrister
Barrister, Attorney
Category: Business Law
Satisfied Customers: 34363
Experience:  16 years practicing attorney, JD, BA, MBA
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Hi all, I recently received a downpayment to do a job for

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Hi all,

I recently received a downpayment to do a job for a designer. The amount is quite large and is 50% of the total contract amount.
I spent a lot of time to start putting the job together, purchased materials, turned down other work.
Then I received an email and also a phone call telling me the job is cancelled.
Yesterday I received an email asking me when am I returning the deposit.
I have since stopped working with this customer because there are other things which got confusing as well.
Due to the amount of the deposit, I would not feel right keeping it all, but I also feel that since I have spent time and money on the project and have turned down other work, I should be able to keep some of the money.
What are your thoughts on this.
Thank you.
Hello and thank you for using JA! My goal is to provide you with excellent service and help with your legal problem.
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You would be correct in being able to keep at least some of the deposit. If there was nothing in the contract that made the deposit non-refundable, then you would only be entitled to keep an amount sufficient to compensate you for the labor and costs you have incurred in beginning performance under the contract.
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There is a doctrine in the law called "in quantum meruit" which basicall means "as much as he is entitled to". So you would be fully within your rights to bill the customer for your costs and labor to date and then deduct that from any deposit and refund the balance.
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Thanks.

Barrister

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I cannot enter into an attorney client relationship, this is a public forum, and all posts are available for public viewing. There is no duty of confidentiality that attaches to any posts. The information provided is not a substitute for a local attorney’s legal advice.

Customer: replied 3 years ago.

Thank you for the quick response.


 


I take it then that any reasonable expense would be ok to deduct?


 


I gather that I need documentation?


 


Some costs are direct and some indirect. Would the indirect expenses be reasonable in a court of law (in general)?

Yes, as long as you can document the expenses and time and effort you put into the project to the point of where it was cancelled, then you can deduct them from the deposit. So if you estimate that you had performed about 10% of the work on the entire project, you could keep 20% of the 50% you received as a deposit.
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And yes, whether it was a direct or indirect cost, it would be compensible. However, if you gave up another job that would have generated $XXXX in profit, it would be difficult to claim that because you don't know if you would actually have received that and it would be speculative. So I don't think you could claim lost earnings on another job that you rejected due to taking this one. But other expenses that you can tie directly to this job would be compensible.
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Thanks.

Barrister

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Please don't forget to rate my service "OK" or higher. It is only then that I receive credit for my work.

.

If you need further help, just reply to me via the “REPLY” button and I will be happy to continue.

.

I cannot enter into an attorney client relationship, this is a public forum, and all posts are available for public viewing. There is no duty of confidentiality that attaches to any posts. The information provided is not a substitute for a local attorney’s legal advice.

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