Deposits and Cancellation Fees: Playing Fair
High deposits and cancellation fees could mean serious sanctions for wedding businesses (particularly venues). The Competitions and Marketing Authority were recently in the news for writing to a number of wedding venues, warning them that large deposits and cancellation charges could be a breach of consumer law. The line between what’s fair and what’s not is an interesting one to explore.
General booking etiquette:
When a couple place a booking, it is usually confirmed with a deposit, which then means that you and the client are entering into a contract. Deposits are usually non refundable, but it is now common place to offer a ‘cooling off’ period which is 14 days (trading standards recommends). If couples change their minds about the supplier, or about getting married, their deposits are not covered by wedding insurance.
The importance of contract wording:
Ensure that you have a written contract with full terms and conditions, including refunds and cancellation rights. Also include within that when payments are due, but also at what stage within the booking period the customer is liable to pay for the services if they cancel. So, for example – if they cancel 3 months before they have to pay 50% of the balance or 1 month before 100%. You need to remember that if the terms and charges are unfair they will be deemed as not legally binding and can be challenged by customers through the courts. So, don’t let it get to that stage and be fair! The CMA (Competition and Marketing Authority) is advising all businesses to revisit their contracts to ensure that they are lawful.
If a customer cancels far enough in advance and you are able to replace that booking, then it would be seen as the right thing to do to give the customer a full refund of any monies paid less a nominal amount to cover your administration costs to date (especially if items haven’t been purchased to fulfil the order). If you have turned away other bookings and it is now too late to re-sell the cancelled date it is reasonable to charge higher cancellation fees than a business that can take an infinite number of bookings for a date. If the majority of the cost of the booking is to purchase stock to fulfil the order, such as flowers, it is unreasonable to charge 100% of the contracted amount if the business has not actually incurred that cost. If a couple cancels, businesses should look at each situation individually as all circumstances are different. Whilst you don’t want to lose out financially, it is very important not to be seen to be making money from a service that you are no longer supplying.
To read more about the Government’s guidance on deposits, cancellation fees and possible sanctions, click here.