Deposits, staged payments and what happens if the work stops

A deposit is money paid in advance against work that has not yet been done, and that framing matters more than it looks, because it is the basis for almost everything that follows if a project stops partway through. It is not a fee for the privilege of engaging a supplier, and a supplier who has done little or no work generally cannot simply keep it.

This page describes the general legal position around deposits and staged payments. It is not legal advice, and what actually happens in a specific dispute depends on the contract terms and the facts.

What a deposit legally represents

Absent a contract term saying otherwise, a deposit is an advance payment against the value of work to be performed. If a supplier does little or none of the contracted work and the relationship ends, the client generally has a right to recover the amount paid in excess of the value of work actually performed — this can arise under the contract itself, under the consumer guarantees covered on consumer guarantees on a web design service, or under general principles preventing one party from being unjustly enriched at the other’s expense. Which basis applies, and what it produces, depends on the specific facts and the contract’s own terms.

Why a “non-refundable deposit” clause does not settle the question

A contract term describing a deposit as non-refundable is a common clause, and it does not automatically override the client’s rights. Where a supplier has done negligible work, a term purporting to let them keep the full deposit regardless can be examined as an unfair contract term under the ACL’s unfair contract terms regime — which applies to standard form contracts, including many small business contracts — or can fail to survive scrutiny under general contract principles governing penalty clauses, which restrict a term whose real purpose is to penalise a party for termination rather than to genuinely estimate the paying party’s loss. Whether a specific clause is enforceable is a legal question on the specific wording and circumstances, not something a general clause label resolves either way.

What a reasonable staged-payment structure looks like

A deposit followed by milestone payments tied to defined, objectively identifiable stages — design sign-off, build completion, launch — is a common and defensible structure, because each payment corresponds to work that has actually been delivered and accepted at the point it is paid. A structure that front-loads most of the price into the deposit, with little tied to actual progress, concentrates the client’s risk at the point where the least has been delivered, which is the specific pattern worth being cautious about regardless of how the contract otherwise reads.

Is there a legal cap on a web design deposit?

No general, Commonwealth-wide cap applies to deposits for web design services specifically. Some state-based licensing regimes cap deposits for particular regulated trades — residential building work in several states is a common example — but web design does not currently sit inside one of those regimes. Whether a specific deposit amount is reasonable is assessed on the circumstances of the transaction rather than against a fixed percentage this page could state.

What happens if the supplier becomes insolvent

If a supplier ceases trading or becomes insolvent after a deposit is paid, the client’s practical position changes materially: a legal right to recover the money may still exist, but enforcing it against an insolvent or deregistered business is often not commercially worthwhile, and any recovery competes with the claims of other creditors. This is a genuine, distinct risk from a supplier simply failing to deliver while still solvent and traceable, and it is one of the reasons a staged structure — where the amount at risk at any point is proportionate to work actually delivered — matters more than the legal right to eventually recover an overpayment.

What to check before paying a deposit

Whether the entity you are paying is a registered business, checkable through the Australian Business Register, rather than an unregistered individual with no separate trading identity. What the contract actually says happens to the deposit if either party terminates before the work is complete. Whether the payment structure is genuinely staged against milestones, or concentrated up front. And whether the supplier has a track record you can verify, since a newly formed entity with no history carries a different risk profile from an established one, regardless of what either would say about it.

What to do if work has already stopped

Document what has been paid, what has been delivered against that payment, and make a clear, dated written request for either the outstanding work or a refund of the unearned portion. What the practical order of operations looks like from there — including when to involve a dispute process — is covered on what to do if your web developer disappears and can you sue a web designer, which pick up once the legal position described here needs to be actually enforced.

Refund, repair, replace and consumer guarantees: why the ACL’s services framework, not the goods one, is relevant here

Australian Consumer Law’s most commonly cited consumer guarantees — repair, replace or refund — attach specifically to goods, a physical product that turns out faulty; a web design deposit is not that situation, because no product has been supplied yet to repair or replace. The guarantee that actually attaches to a services contract like this one is different: services have to be provided with due care and skill, fit for any disclosed purpose, and within a reasonable time — and a service not yet performed at all, where a deposit was paid against a specific sum, is assessed under the general contract and unjust-enrichment principles already covered above, not the goods-specific remedy language a general consumer law search tends to surface first. Getting this distinction right matters, because searching “consumer law refund” tends to return guidance written for a faulty product, not an unperformed service, and applying the wrong framework to the wrong situation produces confident-sounding advice that doesn’t actually apply.

Most suppliers would rather resolve a deposit dispute directly than have it escalate. If a written notice requesting resolution directly with the supplier does not produce an answer, a state or territory consumer affairs body, or in some cases a tribunal, is where an unresolved disagreement typically goes next.

What to do next

Before paying any deposit, confirm in writing what portion of the total price it represents, what stage of work it is meant to cover, and what happens to it if the project ends before that stage is reached. The wider question of what a fair quote should contain, deposit structure included, is covered on what drives the cost of a website.