If I had a client cancel a project 4 days after accepting a deposit that secured my time and after procuring the necessary materials, am I obligated to return any portion of the deposit?

Asked on March 5, 2019 under Business Law, Arizona

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 1 year ago | Contributor

No, you are not obligated to return any part of the deposit. When the other side breaches the agreement (whether written or oral) by not having you perform the work or services that you had agreed to provide, you are allowed to keep the deposit due to their breach. Only if you had cancelled the contract would you have to return the deposit, because you cannot refuse to work while keeping their money; but when they cancel, their breach entitles you to keep the deposit.


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