We are a countertop fabricator. In January of 09, one of our salesmen wrote a contract for countertops what was grossly underpriced. He has since been fired. We have stored the material in our warehouse ever since and finally we sold it. The customer contacted us in December 09 to have their countertops installed. We let them know that there was a mistake in the pricing of their contract and that we could not do the job at the price the previous salesman quoted them. Can we just refund their money since we have not damaged them in any way or, can they go to court and force us to complete the job at the contracted price?

We are a countertop fabricator. In january of 09, one of our salesmen wrote a contract for countertops what was grossly underpriced. He has since been fired. We have stored the material in our warehouse ever since and finally we sold it. The customer contacted us in December 09 to have their countertops installed. We let them know that there was a mistake in the pricing of their contract and that we could not do the job at the price the previous salesman quoted them. Can we just refund their money since we have not damaged them in any way or, can they go to court and force us to complete the job at the contracted price?

That's iffy. Does the contract state anything that gives you a loophole in regards to cost(a disclaimer that states it's just an estimate and the actual costs may be more or less than quoted)?

I would definitely offer to refund their money, apologizing for any inconvenience; you could also offer to do the work at a somewhat reduced price and simply have them pay the difference.

The worst they can do is refuse the refund and sue you; you can go to court and state that your employee was negligent, you offered to refund their money and they declined.

If they have a signed contract, and don't follow the exact terms of it, they may sue for for performance, or have it done by someone else and sue you for the difference in additional costs.

So if he had the authority to make a contract, you are bound by it