Question Originally Appearing on AVVO
Question (from anonymous in Florida):
“I signed a contract that said a 25% deposit would be non refundable for a catering event.: I paid over the 25% non refundable deposit and then cancelled my event. The vendor states now that any additional monies paid is also forfeited. Should it have to be stated separately from the deposit in the contract? Is this right?”
Response (from Attorney Rob Schenk):
Should the contract explicitly provide that 25% of the contract price is kept in the event of cancellation, then that would be all that the caterer is entitled to. These types of clauses, in which a specified amount is kept, are referred to as liquidated damages clauses (LDC). Generally, the non-breaching party (the caterer) is ONLY entitled to the LDC amount, even if that party has other damages from the cancellation (for example, the caterer has already bought the food) which are higher than the LDC amount.
But, it will all depend on the exact wording of the contract.
Moral of the Story: Wedding Vendors, particularly caterers, must have explicit terms on what money is kept in the event of cancellation. Otherwise, you may be shooting yourself in the foot.