What can you charge when a customer cancels?

When a customer cancels, first check whether a legal cancellation right requires a refund. Otherwise, use the contract and applicable law to assess completed work, non-returnable materials and any lawful cancellation charge. Document the costs, subtract amounts already paid, and confirm the balance or refund in writing.

Example: cancellation at three stages of a deck job

This fictional cost example assumes cancellation outside any protected cancellation period and no contractor breach. It illustrates amounts to assess, not guaranteed entitlements. A cedar deck rebuild is priced as five line items: permit and demo $1,800, footings and framing $4,600, decking $3,900, railing $2,300, cleanup and haul-off $1,400. Inside those numbers sit $3,400 of stock lumber and a $1,450 special-order railing package.

The second scenario shows why supplier return terms matter before materials are ordered. Costs can arise before anything is built.

What to include in a cancellation clause

Cancellation language belongs in the contract you sign, not in a policy page nobody read. Four things it needs to name, in the order they cost you money:

• What happens to the deposit. State which lawful charges it covers and when any balance will be refunded. Check the deposit cap and refund deadline; protected cancellations may require a full refund.
• Reimbursement for materials. Supplier return and restocking policies vary by order. Get the return terms for custom cabinets, cut countertops and other special-order materials in writing before purchasing. Then write that the customer pays non-returnable material cost plus any restocking charge, and may take delivery of what they paid for.
• Payment for work performed. Define how completed and partially completed work will be valued, subject to applicable law and any defect or breach claims. Line-item values and measured completion can support the calculation.
• Any short-notice charge. Have local counsel review whether a fixed charge is permitted and how it must relate to likely loss. A fee written into the contract is not automatically enforceable. Do not charge twice for the same loss.

State how to deliver a cancellation and how prolonged stop-work requests will be handled. Do not impose a notice method or condition that restricts a statutory cancellation right.

Check whether a cancellation charge is enforceable

"All deposits are non-refundable. No exceptions." Standing alone in a contract, that sentence is weaker than it looks.

A fixed cancellation charge can be an unenforceable penalty. California Civil Code §1671, for example, treats consumer-service liquidated damages differently from ordinary commercial clauses. Documenting a cost helps explain a charge but does not by itself make the clause lawful.

Keep avoidable loss out of your calculation: stop unnecessary purchases, seek supplier returns and try to refill booked time. Do not bill the entire unperformed contract as if you incurred every cost. If you claim lost profit, distinguish it from costs you saved and have a local construction attorney assess recoverable damages and any required mitigation. California’s damages rule ties recovery to loss caused by the breach; a different state’s rules may differ.

Document work performed and check lien deadlines

Photograph the site when work stops, preserve time entries and supplier receipts, and record which materials were delivered or installed. Separate completed work from cancellation costs and address any customer claim that the work is defective.

A cancellation can affect lien timing, but do not use the cancellation date as a universal trigger. In California, a direct contractor generally has 90 days after completion, shortened by a recorded notice of completion or cessation. Under §8180, continuous 60-day cessation can count as completion, and a recorded cessation notice after 30 days can also matter. Determine the relevant trigger, notices and service requirements for your own state.

So a mid-job cancellation can burn a chunk of your lien window while you are still trading polite emails, and you cannot work out how much from a national rule. If the amount matters, look up your own state's deadline and notice requirements the same week — or ask a construction attorney there.

Check protected cancellations and contractor breach

Some cancellations are protected by law. The FTC Cooling-Off Rule covers specified in-home and off-premises sales. A separate right applies to certain credit transactions secured by the customer’s principal dwelling under Regulation Z. The FTC rule excludes transactions with the federal credit rescission right. Apply the relevant refund and notice rules, including state protections; the cancellation-right guide explains the distinction.

A cancellation involving your own delay, defective work or missing contract requirements needs a different assessment from a customer simply changing their mind. Resolve the underlying complaint before asserting a fee. Where no mandatory refund rule controls, you can also agree to waive a charge for hardship and record that settlement.

Confirm the cancellation and calculation in writing

Call, then email. The call keeps the relationship; the email is what you would show a judge. Confirm the cancellation date, the work performed through it, non-returnable materials and what happens to them, the fee and the contract section it comes from, and the amount due or refunded. One paragraph, no adjectives.

State the calculation plainly: “The supplier will not accept a return of the railing package. I have attached the $1,450 receipt and the cancellation clause. After applying the lawful charges and the payments already received, the attached statement shows the balance or refund.” Use actual figures and address any disputed charge before treating the amount as settled.

Keep approved cancellation terms with the quote

Keep reviewed cancellation terms in DoneQuote’s Agreements or a quote template and check they are included in the version the customer approves. If work stops, use that quote alongside actual work, cost and payment records to prepare any lawful invoice or refund in your accounting tool.

Give the customer an itemized calculation they can review, including the evidence for any disputed charge.