Deposit refund? at DVinfo.net

Kell Smith · February 14th, 2009, 06:30 PM

I had a customer put down a substantial deposit ($1000.00) some time ago, intending to get me his pictures even though he had moved away. He just emailed me mentioning his deposit, said to call him, and that he had not been able to get his pictures to me since he has not been able to get back to get them.
The time period for his project was open-ended and I will continue to honor it.
In the contract, his deposit is listed as nonrefundable.
I do not have the resources to refund his deposit, even if I wanted to. Unfortunately.
Yet I feel guilty taking his deposit if he is not able to do the project.
How would you all handle this?

David Cheok · February 14th, 2009, 09:05 PM

Why did u accept a deposit/retainer that is not locked to a specific date? The purpose of such payments is to ensure our availability for projects on a time period where a fee is paid for consideration of locking a date and rejecting all others for that time period. IMHO, in your specific case, there is not reason to accept such a payment but since you have, you have no choice but to pay it back because there was no fair consideration on your part for keeping it as a passed retainer payment. I suggest negotiation to a point acceptable for both sides.. eg. other services.. watering plants, car etc hehehe.. but seriously.. think u can work something out.

Kell Smith · February 15th, 2009, 01:04 AM

Well, he was retaining me for the job. We did discuss a basic timeline at the time but it wasn't a requirement since it would depend on his timeline for getting back into the area and into his boxes. So the open-ended part was for him and his unique situation.
my purpose in taking a deposit was to get a commitment that he wanted to do the job, and since I am pretty flexible, the time period was of less concern to me. I think that you are more likely to keep the customer and have less risk of them changing their mind, if they give you a deposit.

He has cancelled out several times as he did not have time to go through his stuff when he came into town even though we had discussed meeting each time.

I don't know for a fact that he wants his deposit back. I'm inferring it from the letter but upon a second reading, it's not as clear what he wants. He just said to call him and mentioned his deposit. I really don't have the resources to refund it if that's what he wants. It's possible we could work out a graphic design trade if it came to that but it would be embarrassing if he knew I couldn't afford to return it.

However, he was aware it was nonrefundable as that's in the papers he signed.

He has a lot of money so I'm doubting the money was an issue for him. Not that that matters on principle, but it's good to know that''s not his grocery money.

I'm hoping that in mentioning the deposit maybe he was just reminding me he had a deposit on the project and still intends to do it.

Dave Blackhurst · February 15th, 2009, 01:19 AM

non-refundable deposit is what it is... NOT refundable. I'm sure there's the "ethical" aspect where you may feel that you haven't done the job, so it's awkward. I seem to recall this customer has come up before in another thread, and there are a few issues...

If it were me, I'd just remind him that I have been available to complete the job, and will continue to be, the ball is in his court to get me what I need, and the sooner he does, the sooner he can take advantage of the deposit on my current rate schedule...

Kell Smith · February 15th, 2009, 01:42 AM

Yes, he's becoming famous, isn't he? lol

Steve House · February 15th, 2009, 05:09 AM

You ought to discuss this with a lawyer ASAP I think. If he turns around and sues you for return of the funds, it may turn out that the "deposit" wasn't really your money to do with as you liked quite yet but instead would be considered funds you should have held in escrow until the project was completed. Depending on the nature of the service, time may be of the essence for the contract to be valid and omitting any mention of a specific timeframe for performance could make the entire contract null and void, requiring you to return any money or other property back to your client. At any rate, I think it would have been wise only to have tapped into that deposit to cover your own directly project-related, out-of-pocket expenses incurred on your client's behalf and based on your belief that the project was going forward, until such time as the project was completed, the results delivered to your client, and you were entitled to your full fee. Even where the contract states the deposit is non-refundable, it's not absolute. I think prudence suggests that even a non-refundable deposit reserving services on a certain date should not really be considered actually your money that you can spend until after the date has come and gone because circumstances could arise - cancellation due to an act of God that prevents things from going forward or you're the one who must cancel for reasons beyond your control - where even a "non-refundable" deposit has to be refunded.

Jay Gladwell · February 15th, 2009, 12:36 PM

Quote:

Originally Posted by Steve House

- where even a "non-refundable" deposit has to be refunded.

Why? "Non-refundable" means exactly what is says. What good is a contract if the terms are not going to be binding?

Steve House · February 15th, 2009, 03:28 PM

Quote:

Originally Posted by Jay Gladwell

Why? "Non-refundable" means exactly what is says. What good is a contract if the terms are not going to be binding?

I'm no lawyer but I don't believe it's that simple. Sure, most of the time it would be cut and dried but let's say you've been hired to shoot an interview with Grandfather for the family archives but he drops dead of a heart attack the day before you're scheduled to shoot. Or the groom in a wedding party drops dead the night before the wedding. You mean you're going to say to his family "Sorry, that 50% deposit is non-refundable?"

Paul R Johnson · February 15th, 2009, 04:00 PM

You're willing to still do the job so I don't see the problem? At worst (for him) he doesn't have the material for you to be able to complete the job (his problem). The non-refundable deposit seems pretty straightforward. You're being decent enough being willing to hang on - surely that's enough goodwill from you. Trouble is, this could hang over for ever - some kind of date should have been mentioned.

The only thing I do differently is that I put any payments in advance in a different account, just in case things go wrong. I don't intend giving it back - but sometimes events mean I might have to.

Shaun Roemich · February 15th, 2009, 04:14 PM

Quote:

Originally Posted by Steve House

Or the groom in a wedding party drops dead the night before the wedding. You mean you're going to say to his family "Sorry, that 50% deposit is non-refundable?"

Strictly playing Devil's Advocate but in that case I'd suspect that you have LEGAL grounds to keep it as I'm sure you turned down other work and were, in fact, on retainer. What you MORALLY choose to do however...

(I too am not a lawyer so the previous is merely my opinion and may be hooey and horse puckey)

Steve House · February 15th, 2009, 04:18 PM

Exactly the point I was trying to make, Paul. If Kell decides he just doesn't want to deal with it any longer, he might want to cancel the deal. If he does, I think he would be required to return the deposit less any out of pocket expenses he's incurred doing whatever has been done so far on the project, revenue from lost bookings due to his commitment, etc. He shouldn't lose anything, in other words. But if the client is the one who decides to cancel, then Kell is probably entitled to keep the whole amount. What puts it up in the air, since there's no time specified, is whether the client's extreme feet-dragging could be considered some sort of 'constructive cancellation' allowing him to keep the money. I'd be loathe to make that determination myself without consulting an attorney as to the possible ramifications and case law. Until I was confident the money was really and truly mine I'd be very uncomfortable spending it. Contrary to Jay's statements, contested contract provisions are tossed out by the courts every day. Just because you write it and agree on it doesn't mean a court will enforce it.

Jay Gladwell · February 15th, 2009, 04:30 PM

Quote:

Originally Posted by Steve House

Just because you write it and agree on it doesn't mean a court will enforce it.

I would beg to differ. As I said before, that's exactly what a contract is for. It is a binding, legal document. If the terms are in writing, if both parties understood and agree to those terms, then the contract is biding, regardless of any "unforeseen" circumstances. The courts are bound to (and do) uphold that agreement as written. There is nothing immoral about that. That's precisely why two parties enter into a contract in the first place.

Quote:

Originally Posted by Steve House

Contrary to Jay's statements, contested contract provisions are tossed out by the courts every day.

Contrary to Steve's statement, the courts do not arbitrarily toss out contract provisions every day. Any such provision that is tossed out has been shown to lack the legal merit it should have contained in the first place. Steve makes it sound like it's the judge's sole discretion as to which provisions will be binding and which ones will not. If that were true, contract law would be in a state of constant confusion.

Steve House · February 15th, 2009, 05:59 PM

Perhaps one of the lawyers frequenting the forum will weigh in on this.

Jay, just because it's in writing and agreed to by both parties doesn't make it enforcable. For an extreme example, sign a contract to deliver a kilo of coke for X dollars, get stiffed on your fee after you get it past Customs and deliver it, then try to sue the supplier for non-payment and see how far you'll get, even if the contract is in writing. There are several elements that must be in a document beyond the signatures of the principals for it to actually BE a binding contract, regardless of what the principals think they've signed. For example, I could easily see a judge ruling in Kell's case that the lack of a specific timetable for performance indicates that a true 'meeting of the minds' did not exist and so the document they signed isn't really a binding contract at all, thus legally it doesn't exist and the decision whether Kell must refund the money drops back onto common law. Heck, there was just such a contract dispute case on Judge Judy within the last few weeks where the whole contract was tossed out for just that reason (not that I rely on TV for legal advice)! As I recall, for a contract to be valid it must be specific as to what both parties must do - it must be completely clear and unambiguous as to what constitutes proper performance on the part of each participant - and the lack of such a timetable could nullify the agreement in its entirity, and that would include the phraseolgy making the 'deposit' non-refundable. If the contract containing the 'non-refundable' provision is nullified, common law (as I understand it) says that advance payments made in anticipation of work commencing on the project must be returned if the project is cancelled and the work is not done.

Jay Gladwell · February 15th, 2009, 06:19 PM

Quote:

Originally Posted by Steve House

Jay, just because it's in writing and agreed to by both parties doesn't make it enforcable. For an extreme example, sign a contract to deliver a kilo of coke for X dollars...

That is a ridiculous example. I specifically, one more than one occasion, used the word LEGAL contract. That lame example is not a LEGAL transaction, therefore such a "contract" would be automatically void and unenforceable.

The situation presented by the OP--the only one being discussed here--is LEGAL because the business transaction IS legal.

Speculate in the absurd all you want, non-refundable means just that.

Steve House · February 15th, 2009, 06:30 PM

Quote:

Originally Posted by Jay Gladwell

That is a ridiculous example. I specifically, one more than one occasion, used the word LEGAL contract. That lame example is not a LEGAL transaction, therefore such a "contract" would be automatically void and unenforceable.

The situation presented by the OP--the only one being discussed here--is LEGAL because the business transaction IS legal.

Speculate in the absurd all you want, non-refundable means just that.

Only is the contract is ruled legally binding, which is not assured. The fact it was signed does not in and of itself make it binding. And the discussion completely overlooks whether or not it should be morally binding. If Kell did no work, hasn't spent anything out of pocket, and has not had to turn down paying work while waiting for his client to get his act together, he's out nothing and so has done nothing to earn the money. His only loss is the emotion of dissappointment of a project he was looking forward to going sour. Does he have the ethical right to keep the money in that case, regardless of what the agreement says? I don't think so and I think that even if the contract was binding, to insist on following it is simply the wrong thing to do. A society where legal technicalities trump human respect is doomed for the start.

February 14th, 2009, 06:30 PM	#1
Kell Smith Major Player Join Date: Jan 2005 Location: USA Posts: 436	Deposit refund? I had a customer put down a substantial deposit ($1000.00) some time ago, intending to get me his pictures even though he had moved away. He just emailed me mentioning his deposit, said to call him, and that he had not been able to get his pictures to me since he has not been able to get back to get them. The time period for his project was open-ended and I will continue to honor it. In the contract, his deposit is listed as nonrefundable. I do not have the resources to refund his deposit, even if I wanted to. Unfortunately. Yet I feel guilty taking his deposit if he is not able to do the project. How would you all handle this?

February 15th, 2009, 05:09 AM	#6
Steve House Inner Circle Join Date: Mar 2005 Location: Hamilton, Ontario, Canada Posts: 5,742	You ought to discuss this with a lawyer ASAP I think. If he turns around and sues you for return of the funds, it may turn out that the "deposit" wasn't really your money to do with as you liked quite yet but instead would be considered funds you should have held in escrow until the project was completed. Depending on the nature of the service, time may be of the essence for the contract to be valid and omitting any mention of a specific timeframe for performance could make the entire contract null and void, requiring you to return any money or other property back to your client. At any rate, I think it would have been wise only to have tapped into that deposit to cover your own directly project-related, out-of-pocket expenses incurred on your client's behalf and based on your belief that the project was going forward, until such time as the project was completed, the results delivered to your client, and you were entitled to your full fee. Even where the contract states the deposit is non-refundable, it's not absolute. I think prudence suggests that even a non-refundable deposit reserving services on a certain date should not really be considered actually your money that you can spend until after the date has come and gone because circumstances could arise - cancellation due to an act of God that prevents things from going forward or you're the one who must cancel for reasons beyond your control - where even a "non-refundable" deposit has to be refunded. __________________ Good news, Cousins! This week's chocolate ration is 15 grams!

February 15th, 2009, 04:18 PM	#11
Steve House Inner Circle Join Date: Mar 2005 Location: Hamilton, Ontario, Canada Posts: 5,742	Exactly the point I was trying to make, Paul. If Kell decides he just doesn't want to deal with it any longer, he might want to cancel the deal. If he does, I think he would be required to return the deposit less any out of pocket expenses he's incurred doing whatever has been done so far on the project, revenue from lost bookings due to his commitment, etc. He shouldn't lose anything, in other words. But if the client is the one who decides to cancel, then Kell is probably entitled to keep the whole amount. What puts it up in the air, since there's no time specified, is whether the client's extreme feet-dragging could be considered some sort of 'constructive cancellation' allowing him to keep the money. I'd be loathe to make that determination myself without consulting an attorney as to the possible ramifications and case law. Until I was confident the money was really and truly mine I'd be very uncomfortable spending it. Contrary to Jay's statements, contested contract provisions are tossed out by the courts every day. Just because you write it and agree on it doesn't mean a court will enforce it. __________________ Good news, Cousins! This week's chocolate ration is 15 grams!

February 15th, 2009, 05:59 PM	#13
Steve House Inner Circle Join Date: Mar 2005 Location: Hamilton, Ontario, Canada Posts: 5,742	Perhaps one of the lawyers frequenting the forum will weigh in on this. Jay, just because it's in writing and agreed to by both parties doesn't make it enforcable. For an extreme example, sign a contract to deliver a kilo of coke for X dollars, get stiffed on your fee after you get it past Customs and deliver it, then try to sue the supplier for non-payment and see how far you'll get, even if the contract is in writing. There are several elements that must be in a document beyond the signatures of the principals for it to actually BE a binding contract, regardless of what the principals think they've signed. For example, I could easily see a judge ruling in Kell's case that the lack of a specific timetable for performance indicates that a true 'meeting of the minds' did not exist and so the document they signed isn't really a binding contract at all, thus legally it doesn't exist and the decision whether Kell must refund the money drops back onto common law. Heck, there was just such a contract dispute case on Judge Judy within the last few weeks where the whole contract was tossed out for just that reason (not that I rely on TV for legal advice)! As I recall, for a contract to be valid it must be specific as to what both parties must do - it must be completely clear and unambiguous as to what constitutes proper performance on the part of each participant - and the lack of such a timetable could nullify the agreement in its entirity, and that would include the phraseolgy making the 'deposit' non-refundable. If the contract containing the 'non-refundable' provision is nullified, common law (as I understand it) says that advance payments made in anticipation of work commencing on the project must be returned if the project is cancelled and the work is not done. __________________ Good news, Cousins! This week's chocolate ration is 15 grams!

February 14th, 2009, 09:05 PM	#2
David Cheok Regular Crew Join Date: Apr 2008 Location: Bandar Seri Begawan Posts: 38	Why did u accept a deposit/retainer that is not locked to a specific date? The purpose of such payments is to ensure our availability for projects on a time period where a fee is paid for consideration of locking a date and rejecting all others for that time period. IMHO, in your specific case, there is not reason to accept such a payment but since you have, you have no choice but to pay it back because there was no fair consideration on your part for keeping it as a passed retainer payment. I suggest negotiation to a point acceptable for both sides.. eg. other services.. watering plants, car etc hehehe.. but seriously.. think u can work something out.

February 15th, 2009, 01:04 AM	#3
Kell Smith Major Player Join Date: Jan 2005 Location: USA Posts: 436	Well, he was retaining me for the job. We did discuss a basic timeline at the time but it wasn't a requirement since it would depend on his timeline for getting back into the area and into his boxes. So the open-ended part was for him and his unique situation. my purpose in taking a deposit was to get a commitment that he wanted to do the job, and since I am pretty flexible, the time period was of less concern to me. I think that you are more likely to keep the customer and have less risk of them changing their mind, if they give you a deposit. He has cancelled out several times as he did not have time to go through his stuff when he came into town even though we had discussed meeting each time. I don't know for a fact that he wants his deposit back. I'm inferring it from the letter but upon a second reading, it's not as clear what he wants. He just said to call him and mentioned his deposit. I really don't have the resources to refund it if that's what he wants. It's possible we could work out a graphic design trade if it came to that but it would be embarrassing if he knew I couldn't afford to return it. However, he was aware it was nonrefundable as that's in the papers he signed. He has a lot of money so I'm doubting the money was an issue for him. Not that that matters on principle, but it's good to know that''s not his grocery money. I'm hoping that in mentioning the deposit maybe he was just reminding me he had a deposit on the project and still intends to do it.

February 15th, 2009, 01:19 AM	#4
Dave Blackhurst Inner Circle Join Date: Feb 2007 Location: Apple Valley CA Posts: 4,874	non-refundable deposit is what it is... NOT refundable. I'm sure there's the "ethical" aspect where you may feel that you haven't done the job, so it's awkward. I seem to recall this customer has come up before in another thread, and there are a few issues... If it were me, I'd just remind him that I have been available to complete the job, and will continue to be, the ball is in his court to get me what I need, and the sooner he does, the sooner he can take advantage of the deposit on my current rate schedule...

February 15th, 2009, 01:42 AM	#5
Kell Smith Major Player Join Date: Jan 2005 Location: USA Posts: 436	Yes, he's becoming famous, isn't he? lol

February 15th, 2009, 04:00 PM	#9
Paul R Johnson Inner Circle Join Date: Nov 2005 Location: Lowestoft - UK Posts: 4,039	You're willing to still do the job so I don't see the problem? At worst (for him) he doesn't have the material for you to be able to complete the job (his problem). The non-refundable deposit seems pretty straightforward. You're being decent enough being willing to hang on - surely that's enough goodwill from you. Trouble is, this could hang over for ever - some kind of date should have been mentioned. The only thing I do differently is that I put any payments in advance in a different account, just in case things go wrong. I don't intend giving it back - but sometimes events mean I might have to.