We are a software development company that underpriced a project. The asking price was $5000 and our costs are now around $15,000 and the end is not near.
The project's requirements and outcome were agreed upon via email. Due to its unconventional nature we had to put in work that could not be foreseen during the planning stages.
What can a contractor do in a case like this? For example, can we simply return the deposit with an apology? Could we still be sued for damages despite making our best efforts?