Thank you so much for your support and advice.
Apparently according to one of the representatives they said you can't legally retain money for a service regardless of the type of business, if you terminate the contract. So this means technically if DCM punches me in the face and I terminate care I have to return deposit?
But then the consumer automated telephone line said "Ontario does not regulate refunds or deposits" so I am so confused. I contacted a lawyer who told me to contact him when I get sued because he doesn't know what can happen, but I am trying to prevent being sued over $400...
It also doesn't make sense to me because I gave the family other alternatives if they wanted to stay with me but it didn't work for them so they left. I asked them in a text message that I still have "let me know your decision" they replied with "as you now have said twice it is "best" if sally does not return, we will go along with your recommendation and we will consider the contract terminated by you, the provider, based on the fact that the child is not properly adjusting to daycare which entitles you to retain the full deposit as per your contract".
So while they agree with my contract, they are pretty much stating that this situation still falls under Ontario law and this is the reason why she is asking for a refund.
There must be a way around this??

































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