What does the business get to keep?
The wedding venue may be asking for more money than it is entitled to. Just because it is in the contract, doesn’t mean it is always legally binding as businesses cannot rely on unfair terms.
Businesses can keep your deposit or advance payments, or ask you to pay a cancellation charge only in certain circumstances.
If you cancel the contract, the business is generally only entitled to keep or receive an amount sufficient to cover their actual losses that directly result from your cancellation. This could include costs already incurred or loss of profit.
For example, if you cancel one day before the day, it will be unlikely that the venue would be able to cover all of its costs.
So, if you cancel at short notice it would be reasonable to expect the business to keep most - if not all - of your deposit, minus any savings they could make by cancelling orders, staff and if they are able reuse any supplies you ordered at a later date (such as bottled alcohol).
In some cases they may choose to charge a cancellation fee. If they do so, this should be explained in your contract. It would also be reasonable to expect the business to offer you a partial refund if the cancellation was well in advance and it was fully expected they would be able to re-sell the goods or services you ordered. Goods and services may include things like staff hire, prop hire, your flower order and catering.
Businesses must take reasonable steps to reduce their losses by re-selling what has been ordered and paid for. The Competition and Markets Authority (CMA) says non-refundable deposits should only be a small percentage of the total price.
Contact the business
If you have concerns that the terms of the venue are not fair and the businesses is holding or demanding more money than they needed to cover their costs, you should try negotiating with them.
You should ask the business to explain how they calculated the amount they are keeping or charging you for cancelling the contract. You can also ask if the business is a member of a trade association, as the association may be able to help you in your negotiations.
Escalating your complaint
If your negotiations are unsuccessful, you could try an alternative dispute resolution (ADR) scheme, which could solve the disagreement without going to court.
If the business is not a member of an ADR scheme or won’t use ADR, you should keep a record of when you asked them and the details of this request. This information would be required if you decide to take them to court.
It may also help to be familiar with the CMA advice to businesses and reference this when getting in touch with them.
CMA advice to businesses
The CMA advises businesses to consider the following to avoid potential challenges of unfair terms from customers:
- a deposit is just to reserve the goods/services and is no more than a small percentage of the total price
- advance payments reflect the business’ expenses, and leave customers with a reasonable amount still to pay on completion
- customers do not lose large advance payments if they cancel, in all circumstances
- businesses set sliding scales of cancellation charges so they cover their likely losses directly from the cancellation
Do I have to pay a cancellation charge?
A cancellation charge is not necessarily fair just because it is in the contract you signed. If you are faced with a cancellation charge, it needs to be reasonable.
Cancellation charges should be a genuine estimate of the business’ direct loss. So you’re clear on any costs, you may want to query the cancellation charge and check when it would apply before signing a contract.