In an industry-wide investigation, the Competition and Markets Authority (CMA) advised over a hundred wedding and event venues that requiring large deposits could breach consumer law.
The CMA found advance payment terms are commonly used and included terms such as non-refundable deposits, schedules of advance payments and sliding scales of cancellation charges. In certain circumstances these terms may be unfair to consumers, cause consumers financial loss and breach consumer protection law.
The Consumer Rights Act 2015 requires terms in consumer contracts and notices to be fair. Unfair terms are not legally binding on consumers and consumers can challenge them in court. Only a court can determine if a term is unfair. Terms are unfair if their wording represents an unreasonable imbalance between the rights and responsibilities of the consumer and the business, in favour of the business.
Example 1 – Wedding Deposits
A term regarding advance payments which is less likely to be considered to be fair in law involves:
Deposits where they are non-refundable and the amount is more than required by the business to represent the consumer’s payment to reserve the services.
Where such a term is more likely to be considered as fair is when:
Deposits act more as a reservation fee for the services and so are a small percentage of the total price only.
Example 2 – Advance Payments For Weddings
A term regarding advance payments which is less likely to be considered to be fair in law involves:
Advance payments representing more than required by the business to cover its actual costs.
Where such a term is more likely to be considered as fair is when:
Advance payments and instalment schedules reflect only the business’ actual costs and leave consumers with a final amount of the total cost still to pay when the business provides the services.
The CMA or Trading Standards may take enforcement action against businesses if there is evidence they are using unfair terms. Terms must comply with consumer law and are set out clearly and fairly. Seek legal advice. This will save you time, help prevent disputes and reputational damage and protect your business.
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Author: Yvonne Morris
Email: yvonne@cloudlegalsupport.com
website: www.cloudlegalsupport.com
twitter: @CloudLegals