legality of returning deposits

neilswheels

I run a small company (just me) making one off items for customers, both private and businesses.

Last year I quoted for and accepted a deposit for a one off job with another business. The other businesses customer then appeared to change their mind on the design. Time passed, I hadn't received a new design,but as far as I was aware, the commission was still active. But then I recieved an email asking for the deposit to be returned because I hadn't met the deadline, remember, I'm waiting for a new design.

I responded saying that the deposit was not refundable, however, i would make a payment based on the amount of time I had already spent on the project, the difference between that and the full deposit would be returned, and asked for bank details.  I had heard nothing back since March 2019. Today, May 2020, I receive an email saying:

We understand that you have claimed that you undertook some work in quoting the job and that you plan to retain some of the deposit to cover the cost of that.

This is not legal. Quoting is speculative. We did not contract you to undertake paid quoting work and there is no suggestion of that on any record from us or you.

Please return the full deposit  within 14 days to avoid this going to the small claims court.

Can anyone clarify my position regarding this?

Thanks

mattyprice4004

If they paid a deposit, it wasn't just a quote - it was a job you'd agreed, hence the payment.
Remind them of that, and supply all work done so far. 

bris

They are in breach of contract not you. Write back to them saying they are in breach of contract and that you are keeping the deposit for your losses. If the deposit doesn't cover all the losses, (the profit you would have made if the contract was completed)
You can counter claim for the difference. If the deposit more than covers the losses give them back the difference.
The fact they gave you a deposit is the only confirmation you need that they entered into a contract with you, they really cant win.

steampowered

If this went to court, a judge would have to decide:
- Whether there was a contract in place? You say you were contracted, the customer says they did no more than ask you for a quote. The fact that the customer paid the deposit is good evidence that the customer instructed you to proceed but not definitive unless you have accompanying emails.
- Whether you had been instructed to proceed with the work? You say you were, the customer says you weren't.
- What the terms of the deposit were - particularly whether the deposit was refundable? The deposit will be assumed to be refundable unless your quote clearly says it wasn't.

Based on what you've said, I can see this going either way. It will all come down to what paperwork you have!

If you have a signed contract, or you have an email chain proving that the customer agreed to proceed with the work, or you can prove an agreement that the deposit was non-refundable BEFORE it was paid, then you will probably win.

If the only paperwork you have is a copy of your quote, the customer will probably win. 

neilswheels

I have all emails confirming costs and date changes as being fine, and requesting invoice for deposit, and confirmation of payment  of deposit from them. I also have emails of me chasing them for final design confirmation from the customer after I had received the deposit, and them saying they were chasing their client for an update. Then another email saying that because i couldnt meet the deadline, they wanted a refund, but, as i have written above, I was waiting for confirmation on design from them.

Kattekwaad

neilswheels said:

 The other businesses customer then appeared to change their mind on the design.

How do you know this?  What was said and in  what medium was it intimated to you?

The way you have phrased the quote above suggests some doubt.

neilswheels

My client told me.

JReacher1

I assume they’re desperate for cash at the moment. Are we talking thousands here?

What you decide to do probably depends on how much we are talking about. If it’s £50 I would probably refund them to avoid the hassle. 

neilswheels

to expand, the email I received, after agreeing the cost, agreeing a delivery date, and receiving the deposit was this..

,' I think the client now wants to make further adjustments to the design,

It’s likely that they will need a requote at some point.

The Next email was

We have paid you a  Deposit on the 26th September 2018, however you had not completed any of the works due to your lead times. Please can you organise the refund of this money ASAP as we’ve now completed the works in house.

 

 

Kattekwaad

Just refer them to Arkell v Pressdram

neilswheels

Thanks, thats exactly what i'd like to say to them, but probably best not to. Its £650 ish, but as you mention, times arent good right now, and for them to wait a year to persue it...... all a bit sucky