I recently had the unpleasant experience of firing a cake client. Firing anyone isn't fun, but it gets tricky when it's someone who's paid you money to do a cake.
If you do need to fire a client, you need to make sure that you have a procedure for it. Since it isn't something that happens all the time (this is the first time in 16 years that I needed to do it) it might not be something that you've thought about.
In my contract I have a cancellation clause that outlines all of the possible scenarios of what happens if someone cancels their cake order. I also, though, have a section that says that if I cancel the order, this is how it will be handled.
Normally this never comes into play, because it's much more common for a client to cancel an order for whatever reason. But if you did have to cancel, how much money would you give back? Figure that out and put it in your contract.
Also, if the client wants to sue you, how much in damages would they be able to get back? I have a limitation of liability in my contract that addresses that.
What about where they could sue you? You want to make sure that your contract outlines what mediation services they have to use, what state they can take you to court in, and who has to pay court costs.
It's not pretty and it's not something that you need to use every week, or even every years, but if you have a contract with the information in there it will save you a lot of trouble if something does happen and you need to cancel.
Also, make sure that you get your contract looked over by an attorney who can tell you if what you have in it is legal in your state. Laws vary from place to place, and you want to make sure you're covered.
Kara Buntin owns A Cake To Remember LLC, custom wedding cakes in Richmond VA