Response Guide
Invoice & Service Dispute Response

How to Dispute Invoices | Defective Work | Incomplete Services | California Contract Law

✍️ Need to Send an Unpaid Invoice Demand Letter? If someone owes you money, see my guide on How to Write Unpaid Invoice Demand Letters →
Understanding Invoice Disputes
You Received an Invoice Demand - Now What? If you have received a demand letter for payment of an invoice and believe you have valid reasons to dispute it, California law provides important protections. This guide helps you understand your rights as a customer or client, evaluate the legitimacy of the claim against you, and respond effectively to protect your interests.
Common Types of Invoice Disputes
Dispute Type Description Common Examples
Defective Work Services or products delivered do not meet agreed standards or are substandard Construction defects, faulty repairs, poor quality deliverables
Incomplete Services Work was not finished or deliverables were only partially provided Project abandoned midway, missing components, unfinished installations
Unauthorized Charges Charges for work or items never ordered or approved Extra charges without change orders, services not requested
Billing Errors Mathematical mistakes, duplicate charges, or incorrect rates Wrong hourly rate, double billing, incorrect quantities
Scope Creep Disputes Disagreement over what was included in the original agreement Vendor claims extras were outside scope; you believe they were included
Contract Breach by Vendor Vendor failed to meet material contract terms Missed deadlines, failure to meet specifications, warranty violations
Your Rights as a Customer in California
California Law Protects Your Interests: California contract law requires that both parties to a contract perform their obligations before demanding payment. If the vendor failed to perform as agreed, you have the right to withhold payment, demand cure, or reduce payment to reflect actual value received.
  • Right to Receive What You Paid For: Under California contract law, you are entitled to receive the goods or services described in your agreement. Material deviations from the contract give you the right to withhold payment.
  • Right to Cure Period: In many cases, you can demand that the vendor fix defective work before paying. California Civil Code Section 1689 allows rescission of contracts for material breach.
  • Right to Offset Damages: If defective work caused you damages, you can offset those damages against the amount claimed. This is called "setoff" or "recoupment."
  • Protection Against Unfair Practices: California Business and Professions Code Section 17200 prohibits unfair business practices, including demanding payment for services not properly rendered.
  • Good Faith and Fair Dealing: Every California contract includes an implied covenant of good faith and fair dealing. Vendors cannot use contract terms to deprive you of the benefit of your bargain.
When You Have a Valid Dispute

You likely have a valid dispute if any of the following apply:

  • The work or product does not match what was described in the contract, proposal, or quote
  • The vendor did not complete the work before demanding final payment
  • The invoice includes charges for work you never authorized
  • The quality of work is substantially below professional standards
  • The vendor missed critical deadlines that caused you harm
  • You discovered hidden defects after the work was supposedly completed
  • The vendor used cheaper materials than specified without your consent
  • The invoice contains mathematical errors or duplicated charges
Do Not Ignore Demand Letters: Even if you believe the invoice is completely unjustified, ignoring a demand letter can lead to a lawsuit and default judgment against you. Always respond in writing within the deadline stated, even if your response is to dispute the entire amount.
Documentation You Should Gather

Before responding to an invoice demand, collect all relevant documentation:

  • Original Contract or Agreement: Written contracts, proposals, quotes, work orders
  • Change Orders: Any modifications to the original scope
  • Communications: Emails, texts, and letters discussing the work
  • Photos/Videos: Evidence of defective or incomplete work
  • Expert Opinions: If applicable, evaluations from other professionals
  • Payment Records: Proof of any payments already made
  • Inspection Reports: Failed inspections, punch lists, deficiency notices
  • Timeline: Dates showing delays, missed deadlines, abandonment
Evaluating the Invoice
Systematic Evaluation Required: Before responding to an invoice demand, conduct a thorough evaluation of both the invoice and the underlying work. This analysis will determine your response strategy - whether to pay, dispute, or negotiate a resolution.
Step 1: Review the Original Agreement
Question to Ask What to Look For
What was the agreed scope of work? Detailed description of services, deliverables, specifications
What was the agreed price? Fixed price, hourly rate, cost-plus arrangement, payment milestones
What were the payment terms? Due dates, payment schedule, conditions for final payment
Were there completion requirements? Inspection requirements, acceptance criteria, sign-off procedures
What about change orders? Process for approving additional work, written approval requirements
Is there a warranty provision? Warranty period, remedy for defects, notification requirements
Are there attorney fee provisions? Who pays fees in a dispute (applies both ways under Civil Code 1717)
Step 2: Was the Work Completed?
Substantial Performance vs. Complete Performance: In California, a party who has "substantially performed" a contract may still be entitled to payment, minus the cost to complete or repair. However, if performance is incomplete in a material way, you may be entitled to withhold payment entirely until the work is finished.

Evaluate completion status:

  • Was the project finished? Compare actual deliverables against the contract scope
  • Are there punch list items? Note all incomplete items, no matter how minor
  • Did they pass required inspections? Building permits, code compliance, third-party inspections
  • Did you sign a completion certificate? If not, work may not be "complete" under the contract
  • Were all deliverables provided? Documentation, training, licenses, warranties
  • Is the work usable? Can you actually use what was delivered for its intended purpose?
Step 3: Quality Assessment

Evaluate the quality of work received:

  • Does it meet specifications? Compare against contract requirements, industry standards
  • Is it professionally acceptable? Would a reasonable person in that trade consider it acceptable?
  • Are there visible defects? Document all deficiencies with photos/videos
  • Does it function as intended? Test all functionality against requirements
  • Were correct materials used? Verify materials match what was specified
  • Get an independent assessment? Consider hiring another professional to evaluate the work
Cost to Cure Analysis: Calculate the cost to fix all defects and complete all unfinished work. This "cost to cure" is the amount you can potentially deduct from the invoice. Get written estimates from other contractors if possible.
Step 4: Contract Terms Analysis

Review contract terms that affect your dispute:

Contract Provision How It Affects Your Dispute
Payment milestones Were milestones met before payment became due?
Completion requirements Did vendor satisfy all conditions before demanding final payment?
Inspection/acceptance clause Did you have the right to inspect and approve work?
Warranty provisions Can you demand repairs under warranty instead of paying?
Dispute resolution clause Are you required to mediate or arbitrate disputes?
Limitation of liability Does contract limit vendor's responsibility for defects?
Force majeure clause Does vendor claim excused performance?
Step 5: Change Orders and Scope Creep
Unauthorized Extras: If the vendor is charging for work outside the original scope, ask: Was this work authorized? Did you sign a change order? Did you request this work in writing? Without proper authorization, you may not be obligated to pay for extras.

Analyze scope issues:

  • Review all change orders: Were they signed by you? Were prices agreed in advance?
  • Identify unauthorized charges: List any charges for work you did not request
  • Examine "scope creep" claims: Did vendor claim something was "extra" that you believe was included?
  • Check approval requirements: Does your contract require written approval for changes?
  • Calculate unauthorized amounts: Separate disputed charges from legitimate ones
Step 6: Calculate Your Position

Summarize your analysis to determine your response:

Category Amount
Invoice Amount Claimed $__________
Less: Unauthorized Charges ($__________)
Less: Billing Errors ($__________)
Less: Cost to Cure Defects ($__________)
Less: Cost to Complete Work ($__________)
Less: Damages from Delays ($__________)
Net Amount You May Owe $__________
Your Response Strategy Depends on This Analysis: If your calculation shows you owe nothing (or the vendor owes you), you can dispute the entire invoice. If you owe a reduced amount, offer partial payment. If the vendor needs to complete or cure work first, demand performance before payment.
Response Strategies
Choose Your Strategy Wisely: Your response strategy should match your situation. California contract law provides multiple options for disputing invoices, from complete rejection to negotiated resolution. The right strategy depends on the strength of your position and your desired outcome.
Strategy 1: Full Invoice Dispute
When to Use: The vendor materially breached the contract, work was not completed, services were never rendered, or the invoice is for unauthorized work.

How to Execute:

  • Send written response rejecting the invoice entirely
  • State specific reasons for rejection with supporting evidence
  • Cite contract provisions the vendor violated
  • Reserve all rights including right to sue for damages
  • Demand return of any deposits if work was not performed
  • Set deadline for response before you take legal action

California Legal Basis:

  • Material Breach: A material breach excuses your obligation to perform (pay). The vendor cannot recover if they materially breached first.
  • Failure of Consideration: If you received nothing of value, there is no obligation to pay (Civil Code 1595).
  • Prevention of Performance: If the vendor's actions prevented completion, they cannot demand payment.
Strategy 2: Partial Payment with Deductions
When to Use: Work was substantially completed but has defects, billing errors exist, some charges are unauthorized, or quality is below standard.

How to Execute:

  • Calculate the legitimate amount owed after deductions
  • Send written response explaining each deduction
  • Include documentation supporting each adjustment
  • Tender payment for the undisputed amount
  • Clearly state this is "payment in full for all amounts actually owed"
  • Keep detailed records of your calculation methodology

Deductions You Can Claim:

Deduction Type How to Calculate
Cost to Cure Defects Get estimates from other contractors to repair/fix defective work
Cost to Complete Estimate or get bids to finish incomplete work
Diminished Value Difference between value promised and value received
Consequential Damages Your losses caused by defective performance (if not waived)
Unauthorized Charges Remove charges for work not authorized
Billing Errors Correct mathematical mistakes, duplications, wrong rates
Strategy 3: Demand for Cure/Completion
When to Use: You want the work finished properly before paying. The vendor has the ability to cure defects and complete the project. You are willing to pay once work is satisfactory.

How to Execute:

  • Send written notice identifying all defects and incomplete items
  • Provide reasonable deadline for cure (typically 15-30 days)
  • State that payment will be made upon satisfactory completion
  • Reference warranty provisions if applicable
  • Warn that failure to cure will result in you hiring others to complete/repair
  • Reserve right to deduct cure costs from any amount owed

California Right to Cure:

  • Contractors have an implied right to cure defects before losing their right to payment
  • Civil Code 895-945.5 (construction defects) requires opportunity to repair
  • Refusal to allow cure may reduce your damage recovery
  • Document all cure attempts and results
Strategy 4: Mediation/Negotiation
When to Use: Both parties have legitimate positions, a middle-ground solution exists, you want to preserve the relationship, or your contract requires mediation before litigation.

How to Execute:

  • Respond to demand letter expressing willingness to discuss resolution
  • Propose mediation through a neutral third party
  • Suggest meeting to review documentation together
  • Consider splitting the difference on disputed amounts
  • Offer structured payment if cash flow is an issue
  • Get any settlement agreement in writing

Benefits of Mediation:

  • Less expensive than litigation
  • Faster resolution (weeks vs. months/years)
  • Preserves business relationships
  • Confidential (unlike court proceedings)
  • You control the outcome (vs. judge deciding)
  • May be required by your contract anyway
Response Timeline
Act Quickly: Demand letters typically give 7-30 days to respond. Missing the deadline can result in a lawsuit being filed. Even if you need more time to investigate, send an initial response preserving your rights.
Timeline Action
Day 1-3 Review demand letter, gather documentation, begin analysis
Day 4-7 Complete invoice evaluation, determine dispute strategy
Day 7-10 Draft response letter, gather supporting evidence
Before Deadline Send response via certified mail AND email
After Response Monitor for vendor's reply, prepare for next steps
Good Faith Dealing Requirements
California Implied Covenant: Every California contract includes an implied covenant of good faith and fair dealing. Both you and the vendor must act fairly. Do not manufacture disputes to avoid legitimate debts, but do not pay for work not properly performed. Document your good faith efforts to resolve the dispute.
Sample Response Letters
Customize These Templates: The following sample letters should be adapted to your specific situation. Include relevant dates, amounts, and details from your documentation. Always send responses via certified mail, return receipt requested, AND by email for proof of delivery.
Sample 1: Full Invoice Dispute - Work Not Completed as Agreed
[YOUR NAME / BUSINESS NAME] [Your Address] [City, State ZIP] [Phone Number] [Email Address] [Date] VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED AND VIA EMAIL: [vendor@email.com] [Vendor Name / Business Name] [Vendor Address] [City, State ZIP] RE: DISPUTE OF INVOICE - REJECTION OF DEMAND FOR PAYMENT Invoice #[Number] Amount Claimed: $[Amount] Project/Contract: [Description] Dear [Vendor Name]: I am writing in response to your demand letter dated [date] seeking payment of $[amount] for Invoice #[number]. I am disputing this invoice in its entirety and refuse to pay for the following reasons: THE WORK WAS NOT COMPLETED AS AGREED Pursuant to our [written agreement dated DATE / verbal agreement made on DATE], you were obligated to [describe the agreed scope of work]. You have failed to complete this work as required under our agreement. Specifically, the following work remains incomplete: 1. [Describe incomplete item #1] 2. [Describe incomplete item #2] 3. [Describe incomplete item #3] [Add additional items as needed] Under California contract law, you are not entitled to payment when you have materially breached your contractual obligations. Your failure to complete the agreed work constitutes a material breach that excuses my obligation to pay. ADDITIONAL DEFICIENCIES Beyond the incomplete work, the portions you did complete suffer from the following defects: 1. [Describe defect #1] 2. [Describe defect #2] [Add additional items as needed] DEMAND FOR CURE OR COMPLETION Before I will consider any payment, you must: 1. Complete all remaining work specified in our agreement 2. Cure all defects identified above to professional standards 3. Provide evidence that all work meets the specifications agreed upon You have [30] days from receipt of this letter to complete the work and cure all defects. If you fail to do so, I will hire another contractor to complete and repair the work, and I will hold you liable for all costs incurred plus any damages I suffer as a result of your breach. RESERVATION OF RIGHTS This letter is not a waiver of any rights or remedies available to me under California law. I reserve the right to: - Sue for breach of contract - Seek return of any deposits or payments previously made - Claim damages for any harm caused by your defective or incomplete performance - Report your conduct to the California Contractors State License Board [if applicable] - Pursue any other remedies available at law or equity Please respond in writing within [10] days confirming your intention to complete the work and cure the defects. If I do not receive a satisfactory response, I will consult with legal counsel regarding further action. Sincerely, [Your Signature] [Your Printed Name] Enclosures: - Photographs documenting incomplete/defective work - Copy of original agreement - List of incomplete items and defects - Timeline of project communications
Sample 2: Partial Payment Offer with Deduction for Defects
[YOUR NAME / BUSINESS NAME] [Your Address] [City, State ZIP] [Phone Number] [Email Address] [Date] VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED AND VIA EMAIL: [vendor@email.com] [Vendor Name / Business Name] [Vendor Address] [City, State ZIP] RE: PARTIAL PAYMENT WITH DEDUCTIONS FOR DEFECTS Invoice #[Number] Amount Claimed: $[Amount] Adjusted Amount: $[Reduced Amount] Dear [Vendor Name]: I am writing in response to your demand letter dated [date] seeking payment of $[amount] for Invoice #[number]. While I acknowledge that work was performed under our agreement, I am disputing the full amount claimed due to defects, unauthorized charges, and necessary deductions as detailed below. SUMMARY OF ADJUSTMENTS Invoice Amount Claimed: $[Amount] Less: Unauthorized Charges (see below) ($[Amount]) Less: Cost to Cure Defects (see below) ($[Amount]) Less: Cost to Complete Unfinished Items ($[Amount]) Less: Billing Errors (see below) ($[Amount]) ____________ ADJUSTED AMOUNT OWED: $[Amount] EXPLANATION OF DEDUCTIONS 1. UNAUTHORIZED CHARGES - $[Amount] The following items on your invoice were never authorized and are being rejected: - [Item description]: $[Amount] - This work was not included in our agreement and was not authorized via change order - [Item description]: $[Amount] - [Explanation] Under our agreement dated [date], any work outside the original scope required written approval. I never authorized these charges. 2. COST TO CURE DEFECTS - $[Amount] The following defects exist in the work you performed: - [Defect #1]: Estimated repair cost $[Amount] - [Defect #2]: Estimated repair cost $[Amount] I obtained [estimates/bids] from [other contractor name(s)] to repair these defects. Copies are enclosed. Under California law, I am entitled to deduct the cost to cure defective work from the contract price. 3. COST TO COMPLETE - $[Amount] The following items were not completed: - [Incomplete item #1]: Estimated completion cost $[Amount] - [Incomplete item #2]: Estimated completion cost $[Amount] 4. BILLING ERRORS - $[Amount] - [Error description, e.g., "duplicate charge for materials"]: $[Amount] - [Error description]: $[Amount] TENDER OF ADJUSTED PAYMENT I am enclosing payment in the amount of $[Adjusted Amount], which represents full and complete payment for all amounts actually owed under our agreement after the above deductions. By cashing or depositing this check, you agree that this payment constitutes full satisfaction of all claims arising from Invoice #[Number] and our underlying agreement. This payment is tendered pursuant to California Civil Code Section 1526 as full payment of a disputed claim. If you disagree with any of the deductions above, please respond in writing within [14] days with specific objections and supporting documentation. If I do not receive a written response disputing these deductions, I will consider this matter closed upon your acceptance of this payment. Sincerely, [Your Signature] [Your Printed Name] Enclosures: - Check #[Number] in the amount of $[Amount] - Photographs of defective work - Repair estimates from [Contractor Name] - Documentation of unauthorized charges - Calculation worksheet
Sample 3: Demand Completion Before Payment
[YOUR NAME / BUSINESS NAME] [Your Address] [City, State ZIP] [Phone Number] [Email Address] [Date] VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED AND VIA EMAIL: [vendor@email.com] [Vendor Name / Business Name] [Vendor Address] [City, State ZIP] RE: NOTICE OF DEFECTS AND DEMAND FOR CURE BEFORE PAYMENT Invoice #[Number] Project: [Description] Contract Date: [Date] Dear [Vendor Name]: I am in receipt of your demand letter dated [date] seeking payment of $[amount]. I am not refusing to pay - I am requiring that you complete your contractual obligations and cure existing defects before I release final payment. DEFICIENCIES REQUIRING CURE Under our [written agreement dated DATE], you were obligated to complete the following scope of work: [brief description]. Upon inspection of the work, I have identified the following deficiencies that must be corrected: INCOMPLETE ITEMS: 1. [Description of incomplete item #1] 2. [Description of incomplete item #2] 3. [Description of incomplete item #3] [Continue as needed] DEFECTIVE WORK REQUIRING REPAIR: 1. [Description of defect #1 and required correction] 2. [Description of defect #2 and required correction] 3. [Description of defect #3 and required correction] [Continue as needed] CONTRACT PROVISIONS Our agreement requires [reference specific provisions, e.g., "completion of all work to owner's satisfaction before final payment" or "work to meet applicable building codes and industry standards"]. The current state of the work does not satisfy these requirements. [If construction:] California Civil Code Sections 895-945.5 provide you with the right to repair construction defects. I am providing you with this opportunity before pursuing other remedies. DEMAND FOR CURE You are hereby notified that you must cure the above deficiencies within [30] DAYS of receipt of this letter. Specifically: 1. Complete all unfinished work items listed above 2. Repair all defects to meet professional standards 3. Contact me at [phone/email] to schedule a final walk-through inspection 4. Obtain all required inspections and approvals [if applicable] PAYMENT UPON COMPLETION Upon satisfactory completion of all work and cure of all defects, I am prepared to release payment of $[amount, which may be the full amount or an adjusted amount]. Payment will be issued within [10] days of my written acceptance of the completed work. CONSEQUENCES OF FAILURE TO CURE If you fail to complete the work and cure the defects within the time specified: 1. I will hire another qualified contractor to complete and repair the work 2. I will deduct all costs incurred from any amount owed to you 3. If the completion/repair costs exceed the remaining balance, I will pursue you for the difference plus any consequential damages ACCESS FOR CURE I will provide reasonable access to the property/project for you to complete the work. Please contact me at least 24 hours in advance to schedule work times. Please confirm in writing within [7] days that you will cure the deficiencies identified above. I prefer to resolve this matter cooperatively and am willing to discuss any reasonable concerns you may have. Sincerely, [Your Signature] [Your Printed Name] Enclosures: - Detailed punch list of incomplete items and defects - Photographs documenting current conditions - Copy of original contract/agreement - Relevant correspondence regarding scope and specifications
Legal Protections for Invoice Disputes
California Law Provides Multiple Protections: When you receive an invoice for defective or incomplete work, California law gives you significant rights to dispute the charges, demand repairs, and withhold payment. Understanding these legal protections strengthens your position.
Right to Cure and Repair
Vendor's Right to Cure: In California, vendors generally have a right to cure defects before you can terminate the contract or recover damages. However, this right is not unlimited - if the vendor refuses or is unable to cure, you can proceed with other remedies.
  • Construction Defects (SB 800): Civil Code Sections 895-945.5 establish procedures for construction defect claims, including mandatory notice to the builder and opportunity to repair
  • Commercial Code (Goods): Under Commercial Code Section 2508, a seller may cure a defective tender if the time for performance has not expired or if seller had reasonable grounds to believe tender would be acceptable
  • Right to Inspect: You have the right to inspect and reject non-conforming goods or defective work (Commercial Code 2513)
  • Reasonable Time: Cure must be accomplished within a reasonable time; vendors cannot delay indefinitely
Warranty Claims
Warranty Type Description Legal Basis
Express Warranty Specific promises or guarantees made by the vendor Commercial Code 2313 / Contract Terms
Implied Warranty of Merchantability Goods must be fit for ordinary purposes Commercial Code 2314
Implied Warranty of Fitness Goods must be fit for particular purpose if vendor knew your needs Commercial Code 2315
Implied Warranty of Workmanship Services must be performed in a workmanlike manner California Common Law
New Home Warranty (SB 800) Specific standards for residential construction Civil Code 896-897
Consumer Legal Remedies Act (CLRA)
Consumer Transactions Only: The Consumer Legal Remedies Act (Civil Code 1750 et seq.) applies to consumer transactions for goods or services for personal, family, or household purposes. It does NOT apply to purely business-to-business transactions.

If CLRA applies to your situation:

  • Prohibited Practices: CLRA prohibits 27 specific unfair or deceptive practices, including misrepresenting the characteristics or quality of goods/services
  • Pre-Suit Notice: You must send a CLRA demand letter at least 30 days before filing suit, giving the vendor opportunity to cure
  • Remedies: Actual damages, restitution, injunctive relief, punitive damages (in some cases), and attorney fees
  • Class Actions: CLRA permits class action lawsuits for widespread violations
Mechanic's Lien Defense
If a Contractor Threatens a Lien: In construction disputes, contractors may threaten to file a mechanic's lien against your property. Understanding lien rights helps you defend against improper liens.

Key mechanic's lien defenses:

  • Failure to Serve Preliminary Notice: Most contractors (except original contractors) must serve a 20-day preliminary notice. Failure to do so may invalidate the lien.
  • Late Recording: Liens must be recorded within 90 days of completion (or 60 days after notice of completion). A late lien is invalid.
  • Work Not Lienable: Only work that actually improves real property is lienable
  • Amount Disputed: You can bond around a lien or contest the amount claimed
  • Invalid License: Unlicensed contractors cannot enforce mechanic's liens (Business and Professions Code 7031)
  • Release of Lien: Demand unconditional lien releases with each payment you make
Unfair Business Practices (Bus. & Prof. Code 17200)

California's Unfair Competition Law prohibits any unlawful, unfair, or fraudulent business practice:

  • Unlawful: Practices that violate any law, regulation, or other statutory scheme
  • Unfair: Practices that offend public policy or cause substantial injury to consumers
  • Fraudulent: Practices likely to deceive members of the public
  • Remedies: Restitution, injunctive relief (not damages under 17200 alone)
Contractor Licensing Requirements
Unlicensed Contractor Defense: Under Business and Professions Code Section 7031, a contractor who performs work requiring a license without being properly licensed CANNOT recover any compensation for that work - regardless of how good the work was. This is an absolute defense to payment.

To check contractor licensing:

  • Visit the Contractors State License Board website: www.cslb.ca.gov
  • Verify the license was active during the time work was performed
  • Check that the license covers the type of work performed
  • Confirm the contractor has workers' compensation insurance (required)
Statute of Limitations Considerations
Claim Type Time Limit Legal Authority
Breach of Written Contract 4 years Code of Civil Procedure 337
Breach of Oral Contract 2 years Code of Civil Procedure 339
Fraud 3 years from discovery Code of Civil Procedure 338(d)
Construction Defect (SB 800) Varies by defect type (1-10 years) Civil Code 896
CLRA Claims 3 years Civil Code 1783
UCL Claims (17200) 4 years Bus. & Prof. Code 17208
Setoff and Recoupment Rights
Your Right to Offset: When you have claims against the vendor (for defective work, breach of warranty, etc.), you can offset those damages against the amount claimed in the invoice. This right exists independently and does not require filing a separate lawsuit.

How setoff works:

  • Calculate your damages from the vendor's breach or defective performance
  • Deduct those damages from the amount the vendor claims you owe
  • Pay only the net amount (or nothing if your damages exceed the invoice)
  • Document your setoff calculation and provide it to the vendor
  • If sued, assert setoff as an affirmative defense and counterclaim
Attorney Services
Need Help Disputing an Invoice or Demand Letter?

I help businesses and individuals respond to invoice demands, dispute improper charges, and assert their rights when vendors fail to perform. Whether you received a demand letter, are facing a threatened lien, or need to negotiate a resolution, I can help protect your interests.

How I Can Help
  • Demand Letter Response: I draft professional responses that assert your rights, document your defenses, and position you for favorable resolution
  • Invoice Analysis: I review your contract, invoices, and documentation to identify valid grounds for dispute
  • Defect Documentation: I help you document defects and incomplete work to support your deductions
  • Negotiation: I negotiate with vendors to resolve disputes without litigation when possible
  • Lien Defense: I challenge improper mechanic's liens and protect your property rights
  • Litigation Defense: If the vendor sues, I defend your case and assert your counterclaims
  • Consumer Claims: I pursue CLRA and UCL claims against vendors who engaged in deceptive practices
When to Escalate Your Dispute
Consider Legal Assistance When:
  • The amount in dispute is substantial (over $10,000)
  • The vendor has threatened to file a mechanic's lien
  • You have received a lawsuit or court summons
  • The vendor refuses to acknowledge legitimate defects
  • Your contract contains complex arbitration or dispute resolution clauses
  • You believe the vendor engaged in fraud or intentional misrepresentation
  • Multiple vendors or subcontractors are involved in the dispute
  • You need to pursue affirmative claims against the vendor
Schedule a Consultation

Book a call to discuss your invoice dispute. I will review your situation, explain your legal options, and recommend the most effective strategy to protect your interests.

Contact Information

Email: owner@terms.law

Frequently Asked Questions
Yes, California law allows you to withhold payment when a vendor has not properly performed their contractual obligations. You can withhold all payment if there was a material breach (significant failure to perform), or you can deduct the cost to cure defects from the amount owed. Document the defects thoroughly, give the vendor an opportunity to cure if reasonable, and be prepared to justify your withholding if challenged. The key is that your withholding must be proportionate to the actual deficiencies.
A mechanic's lien threat should be taken seriously because liens can cloud your property title and must be addressed. However, there are defenses: verify the contractor served proper preliminary notice, check that any lien would be timely recorded (within 90 days of completion), confirm the contractor is properly licensed (unlicensed contractors cannot lien), and document your legitimate reasons for non-payment. If a lien is filed improperly, you can petition the court to release it and recover your attorney fees. Consult with an attorney if lien action seems imminent.
Generally, no. If your contract requires written change orders for additional work, you are not obligated to pay for extras that were not properly authorized. Review your contract for the change order provisions and gather any communications that show you did not request or approve the additional work. However, be aware that if you observed the extra work being done and did not object, you might be argued to have impliedly consented. Always object in writing immediately if you see unauthorized work being performed.
Every California contract includes an implied covenant of good faith and fair dealing. This means both parties must act fairly and not do anything to deprive the other party of the benefits of the contract. For invoice disputes, this means you cannot manufacture pretextual disputes to avoid paying legitimate debts, but vendors also cannot use technical contract terms to extract payment for work they did not properly perform. Both parties must act honestly and reasonably in performing their obligations and resolving disputes.
Absolutely yes. Always respond to demand letters in writing before the stated deadline, even if your response is to dispute the entire amount. Ignoring a demand letter can lead to a lawsuit and potentially a default judgment against you. Your response preserves your rights, documents your position, and may open negotiations. Even if you need more time to investigate, send an initial response preserving your rights and requesting additional time. Send your response via certified mail and email for proof.
If you are served with a lawsuit, you typically have 30 days to file a response (answer). Do not ignore the lawsuit - that leads to a default judgment. You can assert affirmative defenses (breach of contract by the vendor, defective work, failure of consideration, etc.) and file counterclaims for your damages. If the amount is in small claims court (under $12,500), you can represent yourself. For larger amounts, strongly consider hiring an attorney. Many invoice disputes settle during litigation when both sides realize the costs and risks involved.
It depends on your contract. Under California Civil Code Section 1717, if the contract contains an attorney fees provision, it applies reciprocally to both parties. So if the vendor's contract says they can recover attorney fees, you can too if you prevail. Without a contractual provision, the general rule is each party pays their own fees. However, some statutes provide for fee recovery (like CLRA consumer claims). Review your contract and consult with an attorney about potential fee recovery before litigating.

Related Resources

Explore additional California demand letter guides and legal resources:

Facing an Invoice Demand You Believe Is Unjustified?

Do not let aggressive collection tactics pressure you into paying for defective or incomplete work. I can help you evaluate your dispute, document your defenses, and respond effectively to protect your rights under California law.

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How to Dispute an Invoice in California

When you receive a demand letter for payment of an invoice you believe is unjustified, California law provides significant protections. Whether the work was defective, incomplete, or never authorized, you have the right to dispute the charges and withhold payment until the vendor performs as agreed. Understanding your rights helps you respond effectively and protect your interests.

Key California Protections for Invoice Disputes

Steps to Dispute an Invoice