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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 41221
Experience:  Run my own successful business/contract law practice.
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As a service business, what is my legal obligation to refund

Customer Question

as a service business, what is my legal obligation to refund a deposit if no contract was signed?
Submitted: 1 year ago.
Category: Business Law
Expert:  Dimitry K., Esq. replied 1 year ago.

Thank you for your question. Please permit me to assist you with your concerns.

Historically deposits are 'nonrefundable' unless stated otherwise under contract. But, because there is no contract, the deposit must be returned as there is no contract or meeting of the minds. The deposit does not have to be returned if it was used in preparation for service. For example, if I as an attorney have a 'handshake deal' with someone to represent them in a matter and receive a retainer, arguably a contract exists, and I can then argue that the retainer is mine to keep. On the other hand, if a tax preparer receives a deposit to work on tax returns but the contract is not signed and tax preparer has done no work toward this service, the deposit should be returned as no work was created in anticipation of this deal.

Sincerely,

Dimitry, Esq.