by Legal Goodness June 29, 2022
What happens when a client DOESN’T respond? You’re ready to do your part. They’ve even paid you but they haven’t given you what you need to complete the deal.
It's frustrating because you're not sure where you stand legally. Can you keep deposits or any money paid? You can't wait forever for them to cooperate.
A business relationship is defined by the contract. Everything else is just talk. Your client agreement is the road map and foundation of your relationship. So you should always start there.
Look at your contract. Does it have a refund clause? Are you allowed to keep payments or deposits in certain circumstances?
The refund clause may state that there are no refunds for deposits or payments made for work already completed. Which would be good news to you.
Or, it may allow refunds of a certain percentage within a specific time period, for example, 25% may be refunded if canceled within the first 2 weeks of the project. There are many possibilities so check this provision to see if and when you are required to return funds.
What if the contracts states NO refunds will be given under any circumstance?
In that case, keep in mind that although the contract may state no refunds for deposits, if you haven't completed any of the work they may argue that they should get their money back despite what the contract says.
You would have to decide whether it is worth fighting that battle.
You'll also want to check the termination clause. If you cannot hold up your end of the bargain because they are not responsive, see whether you have an out and how much written notice is needed.
The termination clause may require a certain number of written days notice. And depending on the contract, you may not need a specific reason to cancel.
For instance, you may be able to terminate "without cause" meaning you do not need a specific reason to cancel.
If the contract states that you may keep all deposits, you may be able to terminate the contract without cause and keep the deposit.
If you are required to terminate "with cause" you may be able to argue breach of contract if the contract requires that your client communicate or supply certain items for you to complete the services.
If the client fails to act, that could be considered a breach, which may be cause for termination of the agreement.
When you can no longer wait for a response, consider sending a final notice to your client letting them know that a formal contract termination notice is coming if you do not hear from them within X number of days.
If you receive a response, while you have their attention consider amending the contract to require a response from the client within a certain number of days during each phase of the project. Even if you agree to this more informally via email, it would at least show what you require to continue the business relationship.
If all else fails, you can terminate the contract depending on its terms. Because of the many clauses at play, your response may depend on what your particular agreement states. Use it to guide you in your decision of how to approach the client and of course seek the help of an attorney in your jurisdiction if you need assistance.
It’s important to not only have a contract when doing business but it should also be a well-drafted one that covers the subtle nuisances that go can unnoticed until there is a problem.
If your contract is too simple and just states that you will provide services for a client for a certain amount and everything else is boiler plate language, then that’s not helpful if a problem arises.
A contract cannot prevent every legal situation out there but a solidly drafted one can guide you when common business issues like this come up.
Legal Goodness has all types of agreements for different industries. And if you don’t see something, let me know. I’m always adding new contract templates to the store.
This blog posting is provided for general informational and educational purposes only and is not provided for specific, individual legal advice.
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