Hypothetical Question

I am not a lawyer, but I do spend some of my time working with contracts. In my view, the client terminated the contract when they called to cancel. When they call you back, a new contract needs to be created since the old one has been terminated. I think you could legally charge them another deposit, but you could be nice and apply their old deposit to the new contract. If it ever came to litigation, all of this goes out the window without written documentation. I include language in my contract that cancellation and other change requests must be made in writing.

When in doubt, always document. If a customer cancels, I have a place on my contracts that they sign after doing so.

HBMTN said:

Lets say you book a date and get a non refundable deposit and a signed contract. Then a few months later the client calls and cancels the date and several weeks go by and you book the date for another person. Then for what ever reason the client that canceled calls and decides that they are in fact going through with the event and want to keep you booked. I'm thinking it would be hard to say no being that they have a signed contract.

What would need to be done if someone cancels? Do they need to send you a form stating they are canceling? My contract says if they cancel with in 30 days of the event they owe me 50% of the adjusted invoice and I always get full payment 10 days prior to the event so I don't have to chase them down at the event, plus I get my money before the weather forecast can change their mind when it calls for rain and they did not plan for it.

I'm thinking that asking for the notice of cancellation in writing, what do you do/think?

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Oral testimony can not supersede written documents. If you do not have their cancellation in writing..... they did not cancel and you have a contract.

Long story short, you have two catering gigs on that date and they would win in court.

I'm not a lawyer but, I've spent my entire career dealing with contracts both in the board room and in the court room.

Any verbal cancellation is technically enough. The problem is that if it goes to court, it's a "he said, she said" situation. You don't need any special form. Any written documentation from the customer cancelling the contract is sufficient. An email is the easiest. The original agreement is now null and void.

A solid boiler plate agreement should contain cancelation information and the course of action in the event of a disagreement. Examples of info might include which county a legal dispute would be resolved, mediation, consequential damages, etc.

If the customer reschedules, a new agreement will need to be created.

acguy said:

.......... The problem is that if it goes to court,............

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We can agree on this point.

Think about this as a customer service opportunity. Get them to sign a new contract, don't bitch, let them apply the old deposit (I would take 5 or 10% more prepayment), keep two customers, and avoid bad publicity.

The email thing is spot on. Email is immediate and is rock solid for these types of issues.

The OPs said his agreement already has certain terms included. I'd suggest adding the phrase: This contract may be cancelled by either party upon receipt of written notice 30 days in advance..............

I agree with you Hawg, however, I was focusing strictly on the agreement issues and not on the customer service opportunity.

acguy said:

The OPs said his agreement already has certain terms included. I'd suggest adding the phrase: This contract may be cancelled by either party upon receipt of written notice 30 days in advance..............

I agree with you Hawg, however, I was focusing strictly on the agreement issues and not on the customer service opportunity.

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I agree with every thing you've said. We just look at it a little different and that is a good thing. It helps balance the discussion.

After having a similar situation 10 years ago, I now collect 50% at time of signed contract, and if cancelled more than 30 days in advance, I refund the amount less the non-refundable portion. If they cancel 30 days or less the non-refundable portion is higher due to a possible loss of the booking date and items already purchased.

The contract also states that full payment is due 2 weeks prior to the event, failure to make the payment on time is a breech of contract and the event will be cancelled. I have given exceptions here, but it does provide the leverage in order to get payments. A certified letter can do wonders if they do not take your calls the days before final payment is due.

For the customer to get the refundable portion, they have come in and sign the cancellation section of the form. This voids the contract with signature, and forces them to come in, in a timely manner, before the non-refundable portion increases.

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While this is an excerpt from my company's catering contract....the protections are pretty broad...feel free to cut an paste what's useful. [FONT=&quot]1. [/FONT][FONT=&quot]Contract Price[/FONT][FONT=&quot]. The Contract price shall be based upon the price per person and other charges stated in this contract. The Patron agrees to pay a minimum Contract price for the number of guaranteed persons stated in this Contract which amount shall be due regardless of the number of actual persons attending the function. In the event that the actual number of persons attending the function is greater than the minimum number guaranteed by the patron, the Contract price shall be increased accordingly. The patron shall inform the caterer as to the exact number of persons attending the function no later than seven (7) days prior to the date of the function. During your function a count of number of guests will be taken, if additional guests are in attendance, you will be charged at the contract price per person.[/FONT][FONT=&quot][/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]2. [/FONT][FONT=&quot]Deposit and Payment Terms[/FONT][FONT=&quot]. At the time this Contract is signed by the parties, the Patron agrees to pay the Caterer an initial non-refundable deposit in the amount stated on the front page of this Contract of thirty three (33%). The Patron agrees to pay sixty-six (66%) per cent no later than thirty (30) days prior to the function date and to pay ninety (90%) per cent of the Contract price less any deposits previously paid to the Caterer, no later than 10 days (10) prior to the function date. The balance of the Contract price is due, and payable upon such time that services are rendered. [/FONT][FONT=&quot][/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]3. [/FONT][FONT=&quot]Additional Charges[/FONT][FONT=&quot]. The Caterer reserves the right to make reasonable additional charges for functions extending beyond the time agreed upon in this Contract. Such additional charges are to be paid in full immediately upon conclusion of the function. [/FONT][FONT=&quot][/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]4. [/FONT][FONT=&quot]Compliance with Laws and Regulations[/FONT][FONT=&quot]. The Patron agrees to conform to all of the rules and regulations of the facility in which the function is held as well as all local, state and federal laws and regulations which may be applicable to this function. [/FONT][FONT=&quot][/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]5. [/FONT][FONT=&quot]No Alcohol to Minors[/FONT][FONT=&quot]. The Patron Acknowledges that state law prohibits the sale, or service of alcoholic beverages to, or the consumption of alcoholic beverages by minors. The Patron agrees that in the event any minors are present at the function, the Patron shall designate, a special adult committee to supervise the minors and hereby guarantees to the Caterer that no alcoholic beverages will be sold or served to, or consumed by such minors. [/FONT][FONT=&quot][/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]6. [/FONT][FONT=&quot]Menu Substitutions[/FONT][FONT=&quot]. The caterer shall have the right to make substitutions in the menu without the prior consent of the Patron for any item or items which shall not be reasonably and readily obtainable in the open market. [/FONT][FONT=&quot][/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]7. [/FONT][FONT=&quot]Failure to Perform Contract[/FONT][FONT=&quot]. The Caterer shall not be liable for the failure to perform this Contract due to delays, strikes, storms, accidents or other causes beyond its control or for its inability to perform this Contract because of any assertion of rights by the facility, which reasonably prevents the Caterer from all or part performance. [/FONT][FONT=&quot][/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]8. [/FONT][FONT=&quot]Cancellation by Patron – Damages. [/FONT][FONT=&quot]Because the actual damages that the Caterer would sustain if the Patron cancelled this Contract are uncertain and would be difficult to ascertain accurately, the Patron and the Caterer agree in good faith to estimate, in advance, the amount of damages that cancellation by the Patron is likely to cause the Caterer. When this Contract is signed and the function date is specified, it is necessary for the Caterer to reserve the function date, reserve staff personnel, arrange for necessary equipment, order food and supplies and incur other obligations which are necessary for the successful completion of the services of this Contract. Consequently if the Patron cancels this Contract for any reason, within sixty (60) days of the function date, the Patron agrees to pay and the Caterer agrees to accept fifty (50%) per cent of the Contract price, based upon the minimum number of guaranteed persons, as reasonable and just compensation for the damages sustained by the Caterer. If the Contract is cancelled by the Patron at any other time, the Patron and the Caterer agree that the initial non-refundable deposit stated on the front page of this Contract shall be reasonable and just compensation to the Caterer for the damages it sustains. [/FONT][FONT=&quot][/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]10. Acceptance of Contract. This Contract shall not be valid or enforceable unless approved and [/FONT]
[FONT=&quot] [/FONT][FONT=&quot]accepted by the caterer in writing.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot] 11. Collection Costs. If it is necessary to refer this Contract to an attorney or agency for collection, the Patron [/FONT]
[FONT=&quot] shall be responsible for any and all collection costs, including attorney’s fees in the amount of $175.00 per [/FONT]
[FONT=&quot]hour, reasonable collection agency fees, court costs, interest and administration expenses incurred by the Caterer to enforce the provisions of this Contract. All such costs shall be due regardless of whether a lawsuit is instituted to enforce this Contract. The signer of this Contract agrees to be held personally responsible for payment of all amounts due. If the Patron is a corporation, unincorporated association, partnership or other legal entity, this agreement shall be binding on such legal entity as well as on the individual executing it on its behalf, and each shall be jointly and solely liable here under.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot] 12. Partial Invalidity. If any provisions of this Contract is held by a court of competent jurisdiction to be [/FONT]
[FONT=&quot]legally invalid or unenforceable for any reason, the remaining provisions shall not be impaired or affected in any way and shall remain in full effect as if this Contract had been executed without the invalid provisions. [/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot] 13. Patron will take good care of the fixtures, furnishings, real and personal property in the premises. Patron [/FONT]
[FONT=&quot] assumes responsibility for any damage to such property that may be caused by it, its members, employees, [/FONT]
[FONT=&quot] guests or invitees. [/FONT]
[FONT=&quot] [/FONT]
14. [FONT=&quot]This Contract is not transferable by the Patron without the written consent of the Caterer.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]15. This agreement constitutes the entire agreement between the parties. No oral modification thereof shall be [/FONT]
[FONT=&quot]Valid or of any force or effect.[/FONT]