What to do about a client who cancelled my payment and kept the work files thatI created?

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What to do about a client who cancelled my payment and kept the work files thatI created?

I build websites and had a client who was well pleased with my work until I was called away on an emergency; I left the state to deal with a death in my family for 10 days. I was approximately 2/3 completed with her project (for which we had a contract). She flipped out because I had to delay her project. I reassured her that I would complete it upon my return. However, she contacted her credit card company, claimed I didn’t deliver what was promised, and without another word the money was removed from my bank account. She has the files I completed to date on the website, as well as the 4 domains that I paid for.

Asked on December 29, 2011 under Business Law, Washington

Answers:

Kenneth Avila / Kenneth Avila, Patent Attorney

Answered 9 years ago | Contributor

Analysis of Contract - Was it breached?  Can an excuse be claimed?  What is your liability?
 
When you enter into a valid contract with another party you are bound by the terms of the contract.  If the terms call for completion by a certain date then you are obligated to complete the contract by that date.  So assuming that a valid contract was formed then you breached the contract by failing to complete the contract by the agreed to date. There are some excuses that be claimed by the breaching party.  Some examples are:
 
Waiver:  If the other party relinquished a right to the contract it is called a waiver and will excuse you from performance.  Here if the other party waived their right to the contract due date then you are “excused” from that obligation.  According to your facts the other party did not make such a waiver.
 
Substantial Performance: This is a rather complex excuse but basically if the other party received substantially what they bargained for then you may be “excused” from performance.  However being 2 / 3 complete does not constitute Substantial Performance.
 
Impossibility of Performance:  This will act as an excuse if it becomes objectively impossible for anyone to perform a condition.  An example would be if a contractor is nearly complete in construction of a building and through no fault of their own the building burns down.  If nobody could complete the building on time then the contractor is excused.  However this excuse will not apply because you could have completed the work on time.
 
There are a few other excuses but they clearly do not apply.
 
So in summary it seems as if you did in fact breach the contract and your breach is not excusable.  The client has a right to recover their losses as a result of your breach.  However your client has to prove those losses in order to recover and that may be difficult for them to do.  If they cannot prove those losses then they are in a weak position to win in a lawsuit against you.
 
Remedy of Restitution - Does it apply?  What can you recover?
 
Now let us turn our attention to the work you have performed for the client.  In contract law there exists a remedy called “Restitution”.  This is a remedy to prevent what we call “unjust enrichment”.  From your facts it seems that your client kept items you produced even after she revoked her payment to you.  Thus it seems that your client was “enriched” and that the “enrichment” was “unjust” because the client never paid for it.  You have a right to demand that your client pay for those items.

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