We are often called upon to “book in advance” for goods and services, this request usually being accompanied by the requirement that a deposit is paid.What happens when disaster strikes? The wedding is cancelled, the holiday postponed, the purchaser has a change of heart.
The Consumer Protection Act permits the supplier the option to require payment of a reasonable deposit in advance and to impose a reasonable charge for cancellation of the order or reservation.
What is reasonable? The Act specifies that you have to take into account the following:
- The nature of the goods or services that were reserved or booked. A custom engraved item reading “Thank you for joining us on our wedding day, love William and Kate” is not as easily sold on as a booking for accommodation at a popular hotel.
- The length of notice of cancellation provided by the consumer. This would differ for different items – a wedding venue cancelled one month in advance is not likely to be filled whereas the wedding cake order cancelled a month in advance is more likely to be filled by another order.
- The reasonable potential for the service provider, acting diligently, to find an alternative consumer between the time of receiving the cancellation notice and the time of the cancelled reservation. Turning again to the examples above – a wedding venue is unlikely to find a replacement on short notice while the cake baker is more likely to find a replacement in the same period of time.
- The general practice of the relevant industry. It seems to be the standard to require a deposit, often non-refundable, or refundable within certain time periods for accommodation, venue hire and other service items that will cause inconvenience to the service provider.
The service provider is not permitted to charge a cancellation fee if the person for whom, or whose benefit the booking was made, is hospitalised or dies and is therefore not able to honour the booking.
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