David Morrison, a commercial solicitor at law firm Rooks Rider, reminds us of the importance of using a good contract for group bookings at Christmas time
Christmas is coming. You are looking forward to one of the busiest and most profitable times of the year. Bookings from office parties are rolling in thick and fast. Then a few days before one such event is supposed to take place, the customer telephones to say that only a few of the expected number of guests can attend and wants to cancel his booking. The booking was taken over the telephone and there is some correspondence about the anticipated number of guests. The terms of business were never sent to the customer. Where do you stand?
A contract is created when all the terms are agreed, there is an intention to create a legal relationship between the parties, and "consideration" - usually money - is promised by one party in return for another party providing something such as a service.
In this case the booking was taken over the telephone, and therefore the terms of the contract will include only those things mentioned in the telephone call. It is unlikely that this will be enough to be satisfactory from your point of view. It will also be difficult to prove what was said in the call.
The customer might try to argue that because the number of guests was never finally confirmed there is no contract in place. He might even ask for his deposit to be returned.
It is vital to make sure that your terms of business for group events are brought to the attention of your customers before any booking is confirmed.
You need to have clear procedures in place about how bookings are taken and ensure that reservations staff are properly trained to follow these procedures. When provisional details are taken down over the telephone, staff should inform the customer that the booking will not be confirmed until you acknowledge receipt of a signed booking form. The provisional details are then sent to the customer with the terms of business and, if the customer agrees to the terms, he then signs and returns them. The terms will state that the booking becomes binding only when you acknowledge receipt of the signed contract.
If bookings are taken over the internet, then the website should be constructed to prevent bookings being taken without the customer confirming they have read the terms of business.
Your standard terms of business should be flexible enough to allow you to vary their use between different types of customer or event. For example, you may be willing to grant corporate or regular customers a period of credit in which to settle your charges, whereas you will want to receive a large proportion or full payment for one-off or new customers.
Cancellation charges ought to be a fair reflection of the costs incurred, including loss of profit, without penalising customers unduly.
The contract should limit your liability if things go wrong during the party. Such clauses have to be carefully drafted, as courts will refuse to enforce them if they consider them to be unfair to the customer.
Your terms of business should:
- Clearly state any cancellation charges, the requirement for deposits and other payment terms.
- Limit your liability in case a problem at your end results in the event failing to live up to the customer's expectations (the courts have a discretion to strike out such clauses if they are considered unfair).
- Address the question as to when the contract becomes binding on your business.
- Allow the business to charge on a "minimum number" basis, if agreed.
- Confirm the management's right to eject guests for disruptive behaviour.
- Confirm that the customer is responsible for any damage caused by guests.
- Quote all prices inclusive of VAT with the right to vary the quoted price if the rate of VAT changes.
- Reserve the right to object to the employment by customers of musicians, photographers or the like, and the right to approve any publicity material the customer may use in connection with the event.
It is important to have appropriate terms of business for group bookings and to make sure that bookings are not taken before the customer has seen them. This will help protect you in the event that you have a problem. It can also help you know how to make such events more successful.