Legal Question in Business Law in California

Re: Reducing Vendor Invoices

In answering, I will assume that the oral agreement is valid and enforceable. In a situation such as this, that would usually be the case.

The next issue would be whether the breach of ethical rules was a sufficient ground for you to rescind the contract. Maybe, maybe not. I will assume you were justified in unilateral rescission.

Under these circumstances (a valid contract validly rescinded), I believe your obligation to pay a final bill is based on the fair value of the net benefits you received, which is not necessarily determined by reference to the contract. The contract would be a general guide only.

The rule of "fair value of net benefits" would apply to the plane tickets as follows, I believe. You would have to make some effort to salvage some value from the tickets. Even if they aren't refundable and no one else can use these specific tickets, even the toughest airline rules allow unused tickets to be returned for a credit for future travel. Unless such a credit is truly unavailable or is of no value to you (or the firm) because no one ever uses, or could use, that airline, then you should eb able to net the cost of the tickets against what you owe. If on the other hand some value can be salvaged from the tickets, I think you are legally obliged to allow that as a credit to the other party.

Don't overlook the possibility of charging the former contractor for your costs and other losses associated with finding a replacement to do (or finish) the task (at a possibly higher cost), etc.