Legal Definitions - vexatious refusal to pay

Vexatious refusal to pay refers to a situation where an individual or entity deliberately and unjustifiably withholds a payment that is legally owed, with the primary intention of annoying, harassing, or causing undue trouble to the person or entity awaiting the payment. It implies a refusal made in bad faith, without a legitimate reason, and with an improper motive beyond a simple dispute over the amount or obligation.

• Example 1: A small marketing agency completes a website redesign project for a client according to the agreed-upon contract and specifications. The client, despite being satisfied with the work and having the financial means, refuses to pay the final invoice. Their refusal is not based on any dispute about the quality of the work or a breach of contract, but rather stems from a personal grudge against the agency's owner after a minor disagreement, intending to cause the agency financial distress and inconvenience.

  Explanation: This illustrates a vexatious refusal because the client's withholding of payment is not due to a legitimate issue with the service provided, but rather an unjustified act motivated by personal animosity, designed to harass and cause trouble for the marketing agency.

• Example 2: A homeowner files a claim with their insurance company after their roof is severely damaged in a hailstorm. The damage is clearly covered under their policy, and independent adjusters confirm the extent of the loss. However, the insurance company repeatedly denies the claim without providing a valid reason, demanding excessive and unnecessary documentation, and intentionally delaying communication. Their internal policy is to make the claims process so difficult that policyholders eventually give up or accept a significantly lower settlement.

  Explanation: This scenario demonstrates a vexatious refusal to pay because the insurance company's actions go beyond a standard review or dispute. Their deliberate and unjustified delays and denials, despite clear policy coverage, are intended to harass the homeowner and avoid their legitimate payment obligation, rather than being based on a good-faith assessment of the claim.