What to do when a client wants a refund on a completed project?



  • What do you do when you have a client who hired you for a project and you do tons of work on it, then they stall and don't get back to you? They did it themselves while stalling on responding to us in order to complete the project. Then months later want a full refund, including a refund of the work that we did? We already did a bunch of work on it, they paid for the project that we worked heavily on, never stopped working on and was completed successfully; should we refund what wasn't used for labor hours?

    I have already reached out to our legal team on this but am curious how do you handle this? It seems we were brought in as a backup plan and they were planning to do the work themselves and only pay us if they failed- but they ignore that a large portion of the work is in the prep work and that spending months attempting follow up and the coordination of the project while they secretly work on it in the background costs labor time too.


  • Service Provider

    Was the project paid for as a "project" or as "hours".



  • It was paid for as hours it 50% up front and 50% when done (they paid for it all). Which would mean we were done right?


  • Service Provider

    @Minion-Queen said:

    It was paid for as hours it 50% up front and 50% when done (they paid for it all). Which would mean we were done right?

    That's a confusing way to describe it. If it is hours, it's a question of how many hours were used and what the agreement was for unused hours. If it was a project then it could be half up front and half later. How does a 50/50 split work on an hours agreement?

    Yes, the project sounds like it qualifies as being completed successfully and satisfactorily. It comes down to if they paid to have the project completed or if they just paid for hours to use on a project.



  • There was nothing agreed upon for unused hours. the split is the client pays for half up front before we start and then upon completion. So according to that logic they paid for work that was done!


  • Service Provider

    @Minion-Queen said:

    There was nothing agreed upon for unused hours. the split is the client pays for half up front before we start and then upon completion. So according to that logic they paid for work that was done!

    The question is really.... is it "hours" or is it a "project". What happened if hours ran over? If they paid for hours of work and that is the only agreement, that is confusing. Do they pay when the project is over or the hours are used?



  • The 50/50 split sounds like a project. Though it's not uncommon to say, "The project will take approximately 100 hours for a cost of X. We require .5x now and we'll figure out actual time when the project is finished and bill for the remainder."

    Even in this scenario the client could choose to pay for the expected cost all up front, then either get a refund or a bill at the end for the remainder.

    Outside of that information, I'd definitely bill them for the actual time spent, apply that toward their prepayment and send the rest as a refund. You did work, even if it was prep (any thing you have showing prep work should be given to them as well), you deserve to be paid.



  • I will admit to it being unclear. But they did make the final payment which would mean they accepted the project as finished.



  • Ok, you may have drawn up the contract based on a certain amount of hours being expected to complete the task, but this sounds like a project-based contract. You set a price based on a certain number of hours, but the hours was just a guideline for you. I agree with @scottalanmiller , that unless you would have billed them more for extra hours, this is a project-based contract, which means they paid for you to complete a set of tasks. If you completed them, or they did half and you did half, as soon as you worked on the project at all and the project was completed, unless you did literally almost nothing, then that is within the terms of the contract and they deserve ZERO refund.


  • Service Provider

    A big question would be... if the hours ran over, would they have been paying by the hour?



  • @scottalanmiller said:

    A big question would be... if the hours ran over, would they have been paying by the hour?

    Agreed, if yes, you owe a refund, if no, you get to keep it all - and never do business with them again.


  • Service Provider

    @Dashrender said:

    @scottalanmiller said:

    A big question would be... if the hours ran over, would they have been paying by the hour?

    Agreed, if yes, you owe a refund, if no, you get to keep it all - and never do business with them again.

    I think "never do business with them again" is a given.



  • @scottalanmiller said:

    @Dashrender said:

    @scottalanmiller said:

    A big question would be... if the hours ran over, would they have been paying by the hour?

    Agreed, if yes, you owe a refund, if no, you get to keep it all - and never do business with them again.

    I think "never do business with them again" is a given.

    Yeah, ditto.



  • In reality, it mostly comes down to the contract working itself.