diff --git a/contracts/Marketplace.sol b/contracts/Marketplace.sol
index f2786db..1ee31fd 100644
--- a/contracts/Marketplace.sol
+++ b/contracts/Marketplace.sol
@@ -55,10 +55,12 @@ contract Marketplace is Collateral, Proofs {
     RequestContext storage context = requestContexts[requestId];
     require(context.state == RequestState.Started, "Invalid state");
 
-
     _removeAccountLock(slot.host, requestId);
-    // TODO: burn host's collateral except for repair costs + mark proof
+
+    // TODO: burn host's slot collateral except for repair costs + mark proof
     // missing reward
+    // Slot collateral is not yet implemented as the design decision was
+    // not finalised.
 
     _unexpectProofs(slotId);
 
@@ -66,6 +68,17 @@ contract Marketplace is Collateral, Proofs {
     slot.requestId = 0;
     context.slotsFilled -= 1;
     emit SlotFreed(requestId, slotId);
+
+    Request memory request = _request(requestId);
+    uint256 slotsLost = request.ask.slots - context.slotsFilled;
+    if (slotsLost > request.ask.maxSlotLoss) {
+      context.state = RequestState.Failed;
+      emit RequestFailed(requestId);
+
+      // TODO: burn all remaining slot collateral (note: slot collateral not
+      // yet implemented)
+      // TODO: send client remaining funds
+    }
   }
 
   function fillSlot(
@@ -74,10 +87,10 @@ contract Marketplace is Collateral, Proofs {
     bytes calldata proof
   ) public marketplaceInvariant {
     Request storage request = _request(requestId);
-    // TODO: change below to check !_isCancelled(requestId) instead?
-    require(request.expiry > block.timestamp, "Request expired");
     require(slotIndex < request.ask.slots, "Invalid slot");
     RequestContext storage context = requestContexts[requestId];
+    // TODO: change below to check !_isCancelled(requestId) instead?
+    require(!_isCancelled(requestId), "Request cancelled");
     // TODO: in the case of repair, update below require condition by adding
     // || context.state == RequestState.Started
     require(context.state == RequestState.New, "Invalid state");
@@ -273,6 +286,7 @@ contract Marketplace is Collateral, Proofs {
     uint256 duration; // how long content should be stored (in seconds)
     uint256 proofProbability; // how often storage proofs are required
     uint256 reward; // amount of tokens paid per second per slot to hosts
+    uint64 maxSlotLoss; // Max slots that can be lost without data considered to be lost
   }
 
   struct Content {
@@ -312,6 +326,7 @@ contract Marketplace is Collateral, Proofs {
 
   event StorageRequested(bytes32 requestId, Ask ask);
   event RequestFulfilled(bytes32 indexed requestId);
+  event RequestFailed(bytes32 indexed requestId);
   event SlotFilled(
     bytes32 indexed requestId,
     uint256 indexed slotIndex,
diff --git a/contracts/Proofs.sol b/contracts/Proofs.sol
index 822c1d2..0bd0f12 100644
--- a/contracts/Proofs.sol
+++ b/contracts/Proofs.sol
@@ -118,7 +118,6 @@ contract Proofs {
     pointer = _getPointer(id, proofPeriod);
     bytes32 challenge = _getChallenge(pointer);
     uint256 probability = (probabilities[id] * (256 - downtime)) / 256;
-    // TODO: add test for below change
     isRequired = ids[id] && uint256(challenge) % probability == 0;
   }
 
diff --git a/test/Marketplace.test.js b/test/Marketplace.test.js
index 9d58a47..08d853e 100644
--- a/test/Marketplace.test.js
+++ b/test/Marketplace.test.js
@@ -215,7 +215,7 @@ describe("Marketplace", function () {
       ).to.be.revertedWith("Unknown request")
     })
 
-    it("is rejected when request is expired", async function () {
+    it("is rejected when request is expired/cancelled", async function () {
       switchAccount(client)
       let expired = { ...request, expiry: now() - hours(1) }
       await token.approve(marketplace.address, price(request))
@@ -223,7 +223,7 @@ describe("Marketplace", function () {
       switchAccount(host)
       await expect(
         marketplace.fillSlot(requestId(expired), slot.index, proof)
-      ).to.be.revertedWith("Request expired")
+      ).to.be.revertedWith("Request cancelled")
     })
 
     it("is rejected when slot index not in range", async function () {
diff --git a/test/examples.js b/test/examples.js
index b6302a8..b4ab51c 100644
--- a/test/examples.js
+++ b/test/examples.js
@@ -10,6 +10,7 @@ const exampleRequest = () => ({
     duration: hours(10),
     proofProbability: 4, // require a proof roughly once every 4 periods
     reward: 84,
+    maxSlotLoss: 2,
   },
   content: {
     cid: "zb2rhheVmk3bLks5MgzTqyznLu1zqGH5jrfTA1eAZXrjx7Vob",
diff --git a/test/ids.js b/test/ids.js
index 6f9ca95..2937a0e 100644
--- a/test/ids.js
+++ b/test/ids.js
@@ -2,7 +2,7 @@ const { ethers } = require("hardhat")
 const { keccak256, defaultAbiCoder } = ethers.utils
 
 function requestId(request) {
-  const Ask = "tuple(int64, uint256, uint256, uint256, uint256)"
+  const Ask = "tuple(int64, uint256, uint256, uint256, uint256, int64)"
   const Erasure = "tuple(uint64)"
   const PoR = "tuple(bytes, bytes, bytes)"
   const Content = "tuple(string, " + Erasure + ", " + PoR + ")"
@@ -18,6 +18,7 @@ function askToArray(ask) {
     ask.duration,
     ask.proofProbability,
     ask.reward,
+    ask.maxSlotLoss,
   ]
 }