Legal Question in Business Law in California
Letter of intent dispute
I paid a web designer $20K as a retainer but told him not to start on any work until I said yes because I was having misgivings about the business it was for. The business fell through and I contacted him to get my $20K back minus compensation for his time already spent. He wants to keep $10K of it saying that he turned down business because of my business. Here is an section of the letter of agreement we were working from:
As indicated in our last meeting, we require payment to us of a deposit of $20,000 of which the first $10,000 shall constitute our minimum fee for the services to be rendered. Throughout delivery of our services, a further deposit may be required to replenish the deposit from time to time.
Nothing was signed and there was nothing in the agreement discussing any kind of breach.
I want to compensate him for his time but it seems like $10K is a little excessive. In total we met twice for about 3 hours and talked on the phone 3 times. What rights do I have? Can he keep the $10K?
4 Answers from Attorneys
Re: Letter of intent dispute
The expressed potential need to "replenish" the deposit, would lead one to believe that it was intended that the deposit was available to pay for work undertaken. Otherwise, what need to "replenish?" Review what it is that you both meant by this language. What other way could the deposit be depleted, so that it had to be "replenished?"
Re: Letter of intent dispute
If the agreement was not signed, you should be entitled to a full refund.
Joel Selik
800-894-2889
Re: Letter of intent dispute
As a matter of courtesy (but not a legal necessity), he should be paid for the time -- other than perhaps the first meeting where you wanted to get to know him. Ask him if he would provide to you an accounting for the time spent on your project. I agree with the other attorneys that there was no signed agreement, although your providing the deposit perhaps signified your consent to the terms.
Re: Letter of intent dispute
You should be able to sue him for all of your money back. Please contact our office for assistance.
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