QLD Wedding Expo Stall Cancellation Fees - What is Reasonable?

[guitarist2711]

Hi,

Apologies, I'm not sure if this is classified as Australian consumer law - it's regarding a booking made to host a stall at an event.

We have an Acoustic Duo band. We recently booked a stall at a wedding expo and paid a $150 deposit (full price is $550). Unfortunately since booking, my business partner's full time job has made it difficult to free up weekends for business with the duo, and we had to terminate the band.

This leaves us no reason to attend the wedding expo. We tried cancelling 2 weeks in advance, and they are saying that because the form we signed says you have to pay in full within 4 weeks of the date of the expo, we owe them the full amount. We have repeatedly requested to talk to the events manager with no reply.

I feel that even for a normal cancellation, $550 or 100% is excessive, and they have made no attempt to refill our spot. Further more we have had to cancel for reasons outside our control. Also we never had the benefit of any of their marketing prior to the expo as we didn't send anything to them when we knew the band was terminating.

We are happy to write off the $150 deposit.. Do we have a case here to not pay the outstanding? Or should we just cough up the rest of the $550

 

[Sophea]

Hi guitarist2711,

Were you advised of this term prior to handing over your deposit? Did you get any terms in writing from them as to cancellation etc?

Under contract law, a party to a contract is unable to penalise the other for breaking the contract by charging them a sum that exceeds or is out of all proportion to the likely actual loss caused by the breach and is basically used to pressure the other party into performing the contract. A clause requiring payment of such a penalty at law will be unenforceable.

A party is only able to state that a sum equal to a genuine pre-estimate of the damage likely to be caused by a breach is to be paid if you break the contract.

I would tell them they can keep the deposit but you are not paying the full $550 as it would be an unfair and unenforceable term under contract law for them to require you to pay the full amount. They are required by law to mitigate their losses by finding a replacement for you to take your space so that they are not out of pocket. See what they say.

 

[guitarist2711]

Hi Sophea,

Thanks for the reply.. I actually haven't seen the specific terms on the contract signed, as it was my business partner who signed. However from what he tells me there was something along the lines of 'if 4 weeks of notice is not given, payment will be made in full'.

I'm thinking of going to them on the basis though that we cancelled out of our control, and that the contract term itself is quite excessive

 

[hlly]

Under contract law, a party to a contract is unable to penalise the other for breaking the contract by charging them a sum that exceeds or is out of all proportion to the likely actual loss caused by the breach and is basically used to pressure the other party into performing the contract. A clause requiring payment of such a penalty at law will be unenforceable.

A party is only able to state that a sum equal to a genuine pre-estimate of the damage likely to be caused by a breach is to be paid if you break the contract.

I would tell them they can keep the deposit but you are not paying the full $550 as it would be an unfair and unenforceable term under contract law for them to require you to pay the full amount. They are required by law to mitigate their losses by finding a replacement for you to take your space so that they are not out of pocket. See what they say.

This is irrelevant because the expo's claim here is in debt not in damages. White and Carter Councils v McGregor. Don't give them this second-year-law-student spiel because they'll know you don't know what you're talking about.

My opinion is just to write off the deposit and hope the expo can't be bothered chasing up the rest of the money.

 

[Ivy]

Hi there,

I disagree with @hlly .
The fact that you have cancelled before the service has been provided indicates you are being asked to pay a cancellation fee.
The Australian Consumer Law, rather than contract law, would cover this situation. The ACL prohibits unfair contract terms. It is possible that being asked to pay the entirety of the outstanding amount on the stall will be seen as an unfair contract term. As @Sophea indicated, businesses are only allowed to charge for the reasonable expenses that they incurred in preparing the good or service for you. If they charge more than that it may be seen as a penalty which is prohibited by the ACL.

Whether a contract term is unfair is determined by three factors. Whether the term:

• would cause a significant imbalance in the parties’ rights and obligations arising under the contract and
• is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term and
• would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.

You should note also that deposits are generally no more than 10% of the service cost. You have paid just under 30% of the total cost in your deposit. Unless the business can justify this large deposit and its forfeiture for your cancellation, you may even be able to recover some of your deposit.

I suggest that you call the Queensland Office of Fair Trading and go from there: Contacting Fair Trading | Your rights, crime and the law | Queensland Government

 

[DennisD]

Hi there

First, you might find it useful to revisit your contract and read carefully the relevant terms rather than rely on your business partner's summary.

Something in your description caught my eye: you mention that ''we have had to cancel for reasons outside our control'', those reasons appear to be ''unfortunately since booking, my business partner's full time job has made it difficult to free up weekends for business with the duo, and we had to terminate the band.'' Is this correct? The kinds of things which count as '''outside our control'' are often of a different nature to what you describe, which perhaps seems more like a change of mind.

Best of luck and let us know how it goes!