Ok - to clarify the situation
Your client (the domain owner) approached you - a contractor - to do some work i.e. Build a website You then subcontracted another group - the Indians - to do some of the work for you and they did not deliver. And they are now threatening your client. Firstly - as the Indians had no direct contact with your client NOR was there any agreement directly between them and your client - there is nothing they can do. Any court of law would drop this immediately as the case would be between yourself and the Indians. And as such you have a good reason (Backed by Elance's refund) for cancelling the Contract between you and the Indians. So - Inform your client of the reason that you dropped the Indians from doing the work (you had the clients best interests at heart and the quality was not there), and that the Indians are trying to harass you into paying them for nothing. If really push comes to shove (and we are talking big courts here which I seriously doubt that the Indians can afford to do) these questions may need to be asked. 1. Who owns the copyright on the logo's and the web design (usually the client or you unless you have asked the Indians to develop this from scratch) 2. How much of the Indian's content is in the completed web page (Although it MAY look the same - if there is significant changes to the functionality of the web page and/or coding) since if you can show that most of their content was deemed unacceptable in quality and was discarded then likewise they have little call for recompense. 3. Elance is a mediator company I understand, so that they are there to protect both parties from each other should things go bad (as they have). If they have acted in your favour then likewise there is not much the Indians can do otherwise sue Elance. Your position - pretty safe. Just make sure that your client understands the reasons for dropping the Indians (with examples if possible) and that they are just harassing. If you also have documented emails and details between yourself and the Indians re quality of work then this only strengthens your case. Good luck, and take a good breath. Dave
