Contract not signed- refund??

I_Love_Shoes

I have written in the contract:
CONFIRMATION: A signed wedding contract and deposit are necessary to confirm the stated wedding services from [company name]
Does this contradict anything?
To be honest I think I will just close the business down and only work through referrals, I've had too much trouble with people expecting the world but not expecting to pay for it!!

steampowered

Deposits are not subject to the rule that you must mitigate your loss. This is because deposits are fixed contractual payments triggered by entering into the contract and holding the date. They are not designed to compensate for other losses. The Op would only be required to mitigate his loss if he wanted to sue the other side for damages (or if the deposit was partially refundable depending on what loss he suffered).

Non-refundable deposits are subject to the rule against penalty clauses, but I think its fairly clear that this is a legitimate deposit for holding the date, not a penalty. Whether or not a clause is a penalty clause is judged at the date a contract is entered into, what happens after that is irrelevant.

Even if you were able to re-book for that weekend I think you could keep the deposit. I would email back explaining that they paid a deposit and agreed to a date in full knowledge of the terms of the contract, therefore you won't be refunding it.

somethingcorporate

steampowered wrote: »

Deposits are not subject to the rule that you must mitigate your loss. This is because deposits are fixed contractual payments triggered by entering into the contract and holding the date. They are not designed to compensate for other losses. The Op would only be required to mitigate his loss if he wanted to sue the other side for damages (or if the deposit was partially refundable depending on what loss he suffered).

Non-refundable deposits are subject to the rule against penalty clauses, but I think its fairly clear that this is a legitimate deposit for holding the date, not a penalty. Whether or not a clause is a penalty clause is judged at the date a contract is entered into, what happens after that is irrelevant.

Even if you were able to re-book for that weekend I think you could keep the deposit. I would email back explaining that they paid a deposit and agreed to a date in full knowledge of the terms of the contract, therefore you won't be refunding it.

Do you have any evidence for what you are saying?

The OFT guidance appears to disagree with you on mitigating losses:

5.6 Cancellation penalties and charges.
<snip>
For example, a penalty for wrongful cancellation that requires payment of the whole contract price, or a large part of it, is likely to be unfair if in some cases the supplier could reasonably reduce ('mitigate') his loss. If, for example, he could find another customer, the law would allow him to claim no more than the likely costs of doing so, together with any difference between the original price and the re-sale price.

I had added the bold.

If the OP re-booked the weekend at no additional cost to himself then no, he would not be allowed to keep the additional deposit. Only what he could prove he lost as a result.

OP, no, equipment is not a reasonable loss resulting from the cancellation of this date, nor is lost profit if you rebook the same date at the same price.

arcon5

steampowered wrote: »

Deposits are not subject to the rule that you must mitigate your loss. This is because deposits are fixed contractual payments triggered by entering into the contract and holding the date. They are not designed to compensate for other losses. The Op would only be required to mitigate his loss if he wanted to sue the other side for damages (or if the deposit was partially refundable depending on what loss he suffered).

Non-refundable deposits are subject to the rule against penalty clauses, but I think its fairly clear that this is a legitimate deposit for holding the date, not a penalty. Whether or not a clause is a penalty clause is judged at the date a contract is entered into, what happens after that is irrelevant.

Even if you were able to re-book for that weekend I think you could keep the deposit. I would email back explaining that they paid a deposit and agreed to a date in full knowledge of the terms of the contract, therefore you won't be refunding it.

:wall: :wall:

steampowered

somethingcorporate wrote: »

Do you have any evidence for what you are saying?

The OFT guidance appears to disagree with you on mitigating losses:

5.6 Cancellation penalties and charges.
<snip>
For example, a penalty for wrongful cancellation that requires payment of the whole contract price, or a large part of it, is likely to be unfair if in some cases the supplier could reasonably reduce ('mitigate') his loss. If, for example, he could find another customer, the law would allow him to claim no more than the likely costs of doing so, together with any difference between the original price and the re-sale price.

I had added the bold.

If the OP re-booked the weekend at no additional cost to himself then no, he would not be allowed to keep the additional deposit. Only what he could prove he lost as a result.

OP, no, equipment is not a reasonable loss resulting from the cancellation of this date, nor is lost profit if you rebook the same date at the same price.

Yes, I do. Have a look at this Legal Update published by one of the major London law firms - http://www.olswang.com/pdfs/comlit_apr10.pdf. The relevant part is set out below:

"It is well established that the courts distinguish between liquidated damages clauses, which represent the genuine pre-estimate of loss, and penalty clauses, which are designed to discourage a party from deliberately defaulting on a contractual obligation.
...

The court determined that deposit clauses were common in ircraft sales agreements, and further that the amount of the deposit was not unusual in comparison with othr agreements or an unconsionable and extravagant amount in comparison with the greatest loss sufferable by the claimant. It held that the US$3million deposit was a reasonable pre-estimate of loss and was in fact far less than the claimant's actual loss. Therefore, on the particular facts, the court held that the forfeiture of deposit clause was enforceable, and did not constitute a penalty"





I think the £100 deposit is a liquidated damage clause, not a penalty. The OFT guidance talks about a "penalty for wrongful cancellation that requires payment of the whole contract price, or a large part of it". But here, only a small portion of the price was payable, and I think is reasonable pre-estimate of loss for holding the dates. Remember that whether something is a reasonable pre-estimate of loss is judged at the time the contract was entered into not what happens later, so I think Op will be entitled to keep the deposit whatever happens.

unholyangel

steampowered wrote: »

Yes, I do. Have a look at this Legal Update published by one of the major London law firms - http://www.olswang.com/pdfs/comlit_apr10.pdf. The relevant part is set out below:

"It is well established that the courts distinguish between liquidated damages clauses, which represent the genuine pre-estimate of loss, and penalty clauses, which are designed to discourage a party from deliberately defaulting on a contractual obligation.
...

The court determined that deposit clauses were common in ircraft sales agreements, and further that the amount of the deposit was not unusual in comparison with othr agreements or an unconsionable and extravagant amount in comparison with the greatest loss sufferable by the claimant. It held that the US$3million deposit was a reasonable pre-estimate of loss and was in fact far less than the claimant's actual loss. Therefore, on the particular facts, the court held that the forfeiture of deposit clause was enforceable, and did not constitute a penalty"





I think the £100 deposit is a liquidated damage clause, not a penalty. The OFT guidance talks about a "penalty for wrongful cancellation that requires payment of the whole contract price, or a large part of it". But here, only a small portion of the price was payable, and I think is reasonable pre-estimate of loss for holding the dates. Remember that whether something is a reasonable pre-estimate of loss is judged at the time the contract was entered into not what happens later, so I think Op will be entitled to keep the deposit whatever happens.

Where customers cancel without any such justification, and the supplier suffers loss as a result, they cannot expect a full refund of all prepayments. But a term under which they always lose everything they have paid in advance, regardless of the amount of any costs and losses caused by the cancellation, is at clear risk of being considered an unfair penalty.

It would also depend on what the total agreed price was. ie if its a £100 deposit on a £200 contract......i think you'd struggle to convince a judge its not a disguised penalty. If its £100 deposit on a £1500 contract, then it would be more likely that the £100 could be kept in full.

And you may want to research that case that was being discussed in your link. Its not as relevant as you think it is.