School deposits

DCodd

goater78 wrote: »

As it says here they don't have the whole details of the case so all comments are of a general nature. There is nothing here that says £350 is an excessive deposit for a school place

Any fixed sum that is payable in all cases would normally be seen as a penalty, as the OP has 2 children the penalty here is £700.00. For the second child, giving two and a half years notice should be reasonable as very little or no costs will have been suffered by the school, maybe an administration fee for recording the reservation would be acceptable but any other costs associated with that child could be challenged, even halibut2209's credit check could not be deemed as reasonable in the case of the second child.

halibut2209

goater78 wrote: »

it doesn't say reservation fee ONLY though.

It says the deposit can't be an advance payment of the fees. However I think thats a grey area as the school could argue that it is a reservation fee, however if you take up the place as a goodwill gesture they take the reservation fee off the school fee price.

I would actually like the OP to take this all the way to see what actually happens.

Very simple to work out. If it's £x for a year, and the outstanding bill is £x-350 then it's not a reservation fee

System

DCodd wrote: »

Any fixed sum that is payable in all cases would normally be seen as a penalty, as the OP has 2 children the penalty here is £700.00. For the second child, giving two and a half years notice should be reasonable as very little or no costs will have been suffered by the school, maybe an administration fee for recording the reservation would be acceptable but any other costs associated with that child could be challenged, even halibut2209's credit check could not be deemed as reasonable in the case of the second child.

Yes but surely the point of a deposit is if you back out and lose it you suffer a penalty. Even if the deposit was £10 it would still be a penalty if they didn't get it back.

The important thing appears to be whether its an unreasonable penalty. The only way you can know that is by finding out what the yearly fees of the school are.

DCodd

goater78 wrote: »

Yes but surely the point of a deposit is if you back out and lose it you suffer a penalty. Even if the deposit was £10 it would still be a penalty if they didn't get it back.

The important thing appears to be whether its an unreasonable penalty. The only way you can know that is by finding out what the yearly fees of the school are.

Any penalty is illegal, a fixed sum deposit is harder to defend as, unless it is less than the expected costs, it suggests that the expected costs are not estimated on an actual cost basis but is a notional figure. This leaves the school open to be challenged on the basis of having a penalty clause in their contracts.

They may be able to justify the costs for the first child but I would suggest that the second child's deposit should be at least partially refunded.

System

But I've seen nothing that says a penalty clause is illegal? The only thing that appears to be illegal is an unfair penalty clause.

On a side note it may not even be a deposit as alot of private schools charge a "reservation fee". This may be what the OP has paid. It's all speculation though without more information

System

This is the penalty clause legislation

Simply because a clause is stated to be a penalty clause is not determinative that it is so. Penalty clauses are oppressive in nature, and serve the purpose of deterring the party labouring under the threat of their imposition from breaching the contract. Several tests have been developed to cater for the various forms that contractual penalties may take, and the factors that may be taken into account may include:
1. whether the sum payable is extravagant when compared to the greatest loss that would be suffered by the innocent party
2. the sum payable is greater than the sum that ought to have been paid
3. when a single lump sum is payable, for any number of breaches of contract and those breaches include both serious and trivial damage. To avoid a term of a contract being determined to be a liquidated damages clause, one size does not fit all.
The measure of the calculation should reflect the claimant’s net loss. Sums otherwise payable under a contract for performance are not penalty clauses as there is no increase in the sums payable under the contract (although the consequences may be oppressive) and sums payable in circumstances that are not connected to a breach are also not properly characterised as liquidated damages or penalty clauses.

It seems like this falls under '1'

"whether the sum payable is extravagant when compared to the greatest loss that would be suffered by the innocent party"

The greatest loss the innocent party can suffer here is the loss of the full fees for that pupil for that term. Therefore it depends how much of the school fees £350 is. I doubt it is that extravagant compared to the full total

Hintza

goater78 wrote: »

On a side note it may not even be a deposit as alot of private schools charge a "reservation fee".

You might have hit the nail on the head with this one.

DCodd

goater78 wrote: »

"whether the sum payable is extravagant when compared to the greatest loss that would be suffered by the innocent party"

The greatest loss the innocent party can suffer here is the loss of the full fees for that pupil for that term. Therefore it depends how much of the school fees £350 is. I doubt it is that extravagant compared to the full total

No it is not, the greatest loss here is the cost to replace the pupil who has the reserved place and in the case of the second child I suggest that it would be minimal if anything.

System

DCodd wrote: »

No it is not, the greatest loss here is the cost to replace the pupil who has the reserved place and in the case of the second child I suggest that it would be minimal if anything.

That assumes they fill all places. Alot of private schools don't fill every place these days. Therefore unless the class is fully subscribed the school will have lost the complete fees for that child

DCodd

goater78 wrote: »

That assumes they fill all places. Alot of private schools don't fill every place these days. Therefore unless the class is fully subscribed the school will have lost the complete fees for that child

Then nothing but an admistration fee can be charged. The school can not charge for loss of profit only net costs. Those net costs being the costs to replace the student, if no student can be found within 2 1/2 years then I would suggest that the school has no loss to claim as it is no worse a position.