How do you handle requests for refunds on non-refundable deposits for cancelled events due to COVID19?
Sharing this question on behalf of community member, Shani Matheson:
How do you handle requests for refunds on non-refundable deposits as their events cannot go ahead due to the COVID19 virus? What is everyone else doing in this situation?
My answer here is from a conflict resolution perspective rather than a legal perspective.
- Firstly, from a legal perspective, there is a possibility that the party may be entitled to a refund if either "force majeure" or frustration applies to the contract.
- You should consider how the way you treat customers at this point in time impact on your future business once the current situation is over.
- Consider who your clients are and how they are being impacted by this from a financial perspective.
- Condsider how you are being impacted by this relative to your clients?
- Can you offer a discount against future services rather than a refund?
Hi Shani, Regie from Sprintlaw here. We're an online law firm that helps small businesses so I thought I'd give you some general legal information that might help!
First - do you have a contract? The answer to this question will most likely be found in any contracts signed between the parties. Have a quick look at any particular cancellation, refunds or payment terms in the contract. As Nicole has mentioned above, there are technical contract law principles such as force majeure and frustration that could be relevant here.
Then, you could explore options. Think about how payment was structured: did you take payment upfront? Was it a deposit? Or are there milestones for payment? These will determine your options, for example, you could potentially postpone the services or goods at a later date (when the event does eventually happen) to preserve the cashflow for your business. Think about how airlines right now are giving flight credits instead of refunds. Many people right now are understanding of small businesses in these kinds of predicaments so negotiating this could be the most practical option. Once you agree on something, it's a good idea to have it in writing to avoid disputes later.
There are also general consumer laws about who is entitled to refunds, etc. However, you'll need to speak with a lawyer to get specific legal advice on your situation.
We also have a useful article here on how to protect your business against event cancellations. Read it here: https://sprintlaw.com.au/protecting-against-event-cancellations/.
I hope this helps! You can also reach out to our team at firstname.lastname@example.org for a quick chat :)