When I signed my daughter up at a home daycare in Illinois, her contract stated that she was owed either a 2 weeks notice or equivalent in cost if we were to terminate her services. The day I was let go from work, she told us that she would meet us in the middle and only take half of the cancellation fee/1 week. We've completed the 1 week and now she wants the 2nd week since she's been "patient". If she takes us to small claims for the 2nd week, does she have a case?

A term in a written contract can be amended ONLY by another written agreement. You cannot legally verbally change the terms of a written agreement.

Yes, she has a case.

And, yes, you were treated unfairly.

We've completed the 1 week and now she wants the 2nd week since she's been "patient".

The wording here bothers me. If there was a cancellation fee then you take the child out of the facility and pay the fee. But this wording implies that you kept your daughter in the facility for the week. If you did, then where does the cancellation fee come in. You still owe one week.

But regardless Judy is correct, you would lose either way.