A business cancellation policy that is rock-solid is a must for any business. It might feel counterproductive, but the reality is that at some point or another you will be facing a cancellation. Be prepared and have your client sign your contract with your policy when you start your business relationship.

So get your FREE CANCELLATION POLICY HERE. Make sure the cancellation policy you use, if separate from your contract, is not in conflict with your contract. To have a bullet proof contract is the foundation of your business with clients.Be sure to have a look at our industry specific creative contracts that include a rock solid cancellation policy.

Cancellations of weddings create a whole host of problems for all the parties involved. From the service providers to the venue and the client.  South African law dictates that you must balance the interests of all of the parties. From making profit to the client wanting money their refund back.

 

 Lessons to be learnt from Covid

1.Living in a bubble of security and relying on consistency to do business is not reality. 2. A business must be prepared for whatever situation may come. 3. Cancellations in unprecedented times means your contract is your fall back. 4. Having a bullet proof contract is not a grudge purchase, it is an investment!   You should by now have realized it is an absolute non-negotiable to have a contract. Also your contract must have a ROCK-SOLID CANCELLATION POLICY that is relevant to your needs. It is important that your cancellation policy is in line with the Consumer Protection Act (CPA). These are the things that you need to know about the CPA. (Remember this blog is not about when a contract is cancelled because a client is in breach of contract.)

1. DAMAGES SUFFERED

The starting point to look at the damages you may face if a client should cancel an agreement. Damages can range from losses on food that spoils, venue availability or the lost opportunity for booking another wedding. But how to do you prove monetary loss for missed opportunity? But by holding a date open for one client booked means you must turn down other weddings on that date. This does not even include that hours consulting by the time a contract is concluded. Unfortunately, one of the biggest problems with cancellation in the wedding industry is that it is time and date specific. We can safely say that your damages is most likely going to be:

  • Actual damages for spoils
  • Time spent consulting
  • Administration
  • Marketing
  • Lost future opportunity

 

2. A REASONABLE CANCELLATION PENALTY

Most businesses are familiar with the term of a “reasonably cancellation penalty”. But what does “reasonable” really mean? Of course the client would see reasonable as the return of all amounts paid. But the service provider would want to retain as much as possible for damages suffered. Not to mention the lost profit opportunity. This is where the tricky parts comes in and where you must make sure that have your cancellation policy. The law is clear that you cannot impose undue hardship on the defaulting party. Subsequently  any amount retained or requested must not be out of proportion to the harm suffered. The CPA makes provision for instances where agreements are cancelled for future bookings like venue and services providers. The good news is that the CPA makes provision for length of notice of cancellation provided by the consumer and the reasonable potential for the service provider.

3. YOU MUST LIMIT YOUR LOSSES

This is an absolute key part of cancellation – as a business owner you must take reasonable steps to limit your loss. That means that if the client cancels you must take reasonable steps to try and find an alternative client for that day This is not always an easy thing to do. Definitely a time consuming task. But there are ways in which to substantiate your efforts.

LEGAL TIP: KEEP A REGISTER
Keeping a register is a good way of trying to mitigate your loss. What is more is that you can prove it. Your register can include names of clients who also requested a specific date. You can also keep a register of the hours spent consulting with clients. Any costs associated with the clients, even marketing. This is extra work on your part, but it is a way to help you prove that you tried to mitigate your losses (in case you ever needed to justify your cancellation fee). It would go a long way in justifying in cancellation penalty requested from the client.

 

4. YOU MUST ACCEPT A CANCELLATION

Wedding venues and service providers are obliged to accept a cancellation of a booking. However, that does not mean that you cannot protect yourself and your potential losses. Make sure you include in your contracts the relevant deposits and cancellation fees.

5. GUIDELINES FOR YOUR CANCELLATION POLICY

A good idea for a cancellation policy is to include:

  1. An industry specific cancellation policy that allows for you to be able to re-book the wedding date.
  2. Any deposit taken be fair, reasonable and proportionate to the loss that you will suffer if not re-booked.
  3. Include a sliding scale of forfeiture of the deposit in proportion to the length of notice given. This can still be subject to the client only paying an administrative charge if the day is re-booked.

 

CONTRACT TIP
Bring the cancellation policy to the attention of your client when signing your contract. An easy way of doing this is to include an initial from your client next to the clause. Our contracts include this already for you.

 

6. COVID AND CANCELLATION

This brings us to the next problem – what about Covid-19 where it is no one’s fault that the client had to cancel. The ideal situation is that you would have had a force majeure clause in your contract. This is not legal advice, and each case should be determined on its own merits. However, what should be fair is to try and find an alternative date for the client.  If this is not possible rely on your cancellation policy and determine what a fair charge is given the situation.

BUSINESS CANCELLATION POLICY CONCLUSION

Cancellation of a wedding date is problematic to all parties involved and the best case scenario of dealing with a cancellation is to make sure that you are prepared with your policy and your contracts. When the time comes you can refer to your bullet proof contract. Do not wait until you are that point to have to decide what is fair and reasonable put your cancellation policy in place at the onset of your business.   At The Legal Stuff we have created industry specific contracts for you with the necessary cancellation clauses included. You can download our Cancellation Policy example here, but like we said make sure that this is not in conflict with any existing contracts. Best case scenario is to be prepared and invest in the real deal contract for your business.