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I delivered software which failed to meet the client's specifications. I followed 90% of the specs, but not 100%.
Client is asking for a partial refund, for the features which were not delivered. He cites our contract which says "the software must be delivered in accordance with the specifications."
Is the client entitled to a refund? How much of a refund?
What happens if I don't give him a refund? Our contract says disputes will be resolved through arbitration.
Obviously, the following is not legal advise, but just some general advise from a seasoned freelancer / consultant:
It looks like your client is right in demanding a partial refund, given that you promised to deliver in accordance with the specifications. If you don't give them a refund, they can send you an arbitration demand and they'll basically sue you, just not in court, but in private arbitration.
My recommendation in such cases is to talk to the client and try to be as accommodating as possible -- perhaps there is a way you can satisfy the remaining 10% or perhaps you can reach some other agreement with the client.
I'd highly recommend avoiding litigation. If you can't make it right for the client, then I'd suggest giving them a refund.
Is the client entitled to a refund?
Yes! This should not even be a question. As a professional it is your duty to deliver what you promise. It will look like fraud if you agreed to do something you knew you weren't capable of and refuse to give a refund.
How much of a refund?
Depends. If the client originally prioritized these as being more important than the other items then you would owe more than 10%. Otherwise at or less than 10%. In other words their perception of what they were paying for and why matters. I'd ask them what they think is fair (since you don't know) and go with that.
What happens if I don't give him a refund? Our contract says disputes will be resolved through arbitration.
Your reputation is worth far more than the money you're hoping to keep. It will cost you more in the long run, to railroad your customer cause they will spread negative reviews about you. You would either go through arbitration or if you can't afford to pay the fees, it might become a public court case which would just make you world famous for not honoring your agreements. https://www.arbitrationnation.com/is-refusal-to-pay-fees-a-way-out-of-arbitration/
