After deciding on a list of requirements with a client and agreeing on a price, the client sent me 50% of the total before work was started, and we agreed the remaining was to be paid at delivery.
I did what I believe to be about 80% of the work, when the client decided he did not like my services and asked to cancel the order. To leave in good terms, I decided to send him the work I've done anyways and not ask for any extra payment.
However the client is asking me to reimburse the first 50% and threatening to use lawyers.
Am I wrong to ask to keep the initial payment? I did a lot of work, paid for products and services. I did not break anything in our arrangement and was following the requirements.
What should I do? I can't really afford a lawyer.
All of this depends on the wording of your agreement.
Let me make a couple assumptions:
If that is the case, then:
Of course -- if any of the assumptions are wrong-- then the advice may not be correct. Usually a client like this blusters-- but in the end doesn't move forward.
(Ask another question about how to avoid this situation in the future.)
This is an example why a contractor should always insist on getting paid by milestones. Establish at least 3 or 4 different milestones during the course of the project. This way, if they will have a hard time explaining in court that they were not happy with the entire project after having sent you several payments, also if you have to take a loss because client is fishy then it's not as much of a loss as 50% of the project.
I'd probably give the money back but be clear that you will sue for damages if they use the IP.
It is sunk cost. Nothing good can come out of this.
It is unlikely to come to "lawyers" if the amount is less than $7,000 or so. However, they may take you to small claims court. (if in the US) You'll likely win, but if it comes to that everyone loses anyway. It is a huge waste of time and effort and goodwill.
The energy should be spent on how to avoid this in the future.
Fix your policy or process or acceptance of clients so that it does not happen again.