What Happens If A Contractor Doesn't Deliver But Has Already Been Paid?

When a contractor fails to deliver services or goods after receiving payment, the client has several legal options to address the issue. The approach may depend on the terms of the contract, the nature of the non-delivery, and applicable laws.

Steps to Take if a Contractor Doesn't Deliver

1. Review the Contract:
- Examine the contract for specific terms regarding delivery, performance timelines, and payment. Look for clauses that outline remedies for non-delivery or breach of contract.

2. Communicate with the Contractor:
- Contact the contractor to discuss the issue and seek clarification on the non-delivery. Sometimes, delays may be due to unforeseen circumstances, and open communication can lead to a resolution.

3. Document Everything:
- Keep a detailed record of all communications, agreements, and any evidence of payment made. Documentation is crucial for substantiating your claims later.

4. Send a Formal Demand Letter:
- If the contractor remains unresponsive or uncooperative, send a formal demand letter outlining your concerns, the terms of the contract, and a request for resolution (e.g., delivery or a refund). This letter may serve as evidence if further legal action is necessary.

Legal Options

1. Breach of Contract Claim:
- If the contractor fails to fulfill their obligations, the client may file a breach of contract claim. The client can seek remedies such as:
- Specific Performance: Requesting the court to compel the contractor to complete the agreed-upon work.
- Damages: Seeking compensation for any financial losses incurred due to the non-delivery.

2. Refund Request:
- Depending on the circumstances, the client may be entitled to a full or partial refund. This can be pursued through negotiation or as part of a legal claim.

3. Dispute Resolution:
- If the contract includes an arbitration or mediation clause, the parties may be required to resolve the dispute through those means before resorting to litigation.

4. Small Claims Court:
- If the amount in dispute is relatively small, the client may file a claim in small claims court, where the process is simplified and generally faster than traditional litigation.

Example

Suppose a homeowner pays a contractor to renovate a kitchen, but the contractor fails to start the work by the agreed date. After contacting the contractor multiple times with no resolution, the homeowner might draft a demand letter requesting immediate action or a refund. If the contractor still does not respond, the homeowner could consider filing a breach of contract claim for the amount paid.