I feel for you.
Hey if I was closer, you could hire me..........lo
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If someone has promised to do something, and you signed a contract stating that, she broke that contract when she didn't fulfill it. Therefore, you shouldn't have to pay her the whole amount.
I always state up front what my limitatons are and exactly what I will and will not do. I'm pretty open to anything, and so far have not had to say no to anything, but I'm sure eventually there will be someone with some bizarre request.
To find a good petsitter, go by referrals from friends/co-workers/relatives. And hopefully ones they have been using awhile. Most vet clinics also have employees that do pet sitting on the side, and will already know the medical side of things. That's what comes in handy for me. I used to work at a vet clinic, and I have many clients that are on meds, and two that need fluids.
I would also ask if they are licensed and bonded (except for the vet employees, they usually do this on the side, and not professionally, so I doubt they would be licensed/bonded). Also ask if they are insured. Most reputable pet sitters will be, at least ones that have been around awhile. I'm not, but I've only been doing this a year, plus I'm moving in the spring. I don't have a large enough client base for it to be worth it.
Good luck in the future. There are alot of us out there, but the really good ones are few and far between.