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  • Welcome to Wedding Industry Law Online!

    Wedding Industry Law is your online resource for legal news and education on running a wedding business. We hope you find the articles, videos, and information helpful. If you have any comments, news tips, or areas that you would like to see covered, please let us know!

    Wedding Industry Law is edited by Wedding Lawyer and Trial Attorney Rob Schenk. Contributing blogger Ayisha Lawrence also kicks out some of the jams, too.

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Should Mom sign my wedding vendor contract?

Mardi Gras chicken wings vs. Lemon Pepper chicken wings, the age old question...

Mardi Gras chicken wings vs. Lemon Pepper chicken wings, the age old question…

THIS BLOG POST IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSTRUED AS LEGAL ADVICE. THIS IS AN EDUCATIONAL BLOG POST CONCERNING GENERAL CONTRACT LAW MATTERS. IF YOU HAVE QUESTIONS REGARDING CONTRACT LAW OR THIRD PARTY BENEFICIARIES, THEN CONTACT A LAWYER IN YOUR AREA.

Let’s talk about the Devil’s Triangle. To minimize confusion, we are going to refer to the persons receiving the vendor’s services, i.e., brides or grooms, as “Recipients” rather than “Client.” We are going to refer to the person paying, in many instances it’s mom or dad or both, as the Money Person. So we have a money person and we have recipients. Got it? Good.

The Devil’s Triangle occurs when (1) Only the Money Person signs the contract or (2) the Money Person AND the Recipients sign the contract.

Who is my client when only Mom or Dad (i.e. the Money Person) sign the contract? 

Who is your client when ONLY the Money Person signs the contract? Generally, only the Money Person. Under basic contract law, only the people who have signed the contract are bound to the promises contained in it. This becomes a major problem when there is disharmony between the Recipients and the Money Person. The Recipients want Rihanna played at the reception, the Money Person wants Whitney Houston. The Recipients want Rugrats themed cupcakes, the Money Person wants Strawberry Shortcake.

Who is the vendor obligated to listen to when there is disagreement? Generally, the Money Person because the Money person is the client. The Money Person is the one on the hook for the payment, so they dictate the services. Any amendments to the contract, or changes to the services, or how the services are to be rendered, are generally going to be the Money Person’s call.

Think of it in reverse, if the Money Person fails to pay you, who can you go after? Only the Money Person. The Recipients didn’t sign the contract, and they have no privity of contract with you. So they are not obligated to pay you if the Money Person doesn’t.

And when you mess up, or breach the contract, it’s just the Money Person that can sue you, correct? No. Unfortunately, when the Money Person signs an agreement with the vendor, the recipients become known in the law as a “third party beneficiary.” Third party beneficiaries can step into the shoes of the Money Person and sue the vendor for breach of contract. So wait a minute. The vendor cannot sue the Recipients to get money, but the Recipients can sue the vendor if there is a breach? Sorry Charlie. That’s how it works.

Who is my client when the Money Person AND the Recipients sign the contract? 

Another pitfall. When the Money Person AND the Recipients sign the contract. Who is your client then?

In that situation, everyone is.

You have the same problem as before, except now when there are disagreements, EVERYONE is your client.

Avoiding this situation

There’s two ways (out of many) that we can handle the Devil’s Triangle.

First, you can take the Money Person completely out of the equation by having only the RECIPIENTS sign the contract. This would make the Recipients your client, not the Money person.

Basically, you may instruct the Recipients to give you the money however it is easiest for them, which sometimes means that it is the Money Person who handles the payment. Maybe it’s the Money Person’s credit card, check, or cash. Whatever. Just because the Money Person is the vessel that provides the funds does NOT necessarily make them a party to the contract. If the Money Person DOES NOT sign the contract, then they are not the client.

But here is your caveat. Remember that you as the wedding vendor can only go after the signers of the contract for breach of contract, including for lack of payment. So, when the Recipients are the signers, it’s only the Recipients that you will be able to sue for the money. Not every time, but a lot of times, the Recipients don’t have money. The Money Person does. DUH, that’s why we call her the money person. That is the trade-off for not having to deal with that issue.

Second, you can  assign a point of contact.

You don’t want 8 different bosses, or be a conflict resolution counselor. In your contract, you can have them agree that only ONE of them will be your point of contact for the services. This can be the Money Person, one of the Recipients, an event planner, me, Obi-Wan Kenobi, whoever they want. The point of contact will be the liaison between the vendor and all the persons, whether Money Person or Recipient. The point of contact is the final word, and the vendor, as per the contract, listens to him or her only. Changes to the scope of services, the little details or the big picture. If there is a disagreement, your name is Paul and that is between ya’ll.

 

How should I calculate my non-refundable deposit?

So let’s talk about a common wedding industry pitfall: Not gettin’ that paper upfront.

Did someone say liquidated? Put some Nescafe in it, then.

Did someone say liquidated? Put some Nescafe in it, then.

The legal term for taking a payment that is non-refundable in the event of a cancellation is called a Liquidated Damages Clause, or LDC for short. So, with an LDC, you and the client are agreeing up front that, if the event is cancelled, your damages, or the harm you will be caused, will be exactly equal to the amount of money that you have accepted from the client up until that point. Read more about the law behind Liquidate Damages Clauses here.

A big pitfall is a weak LDC. That is to say, it does not adequately protect you from the risk of cancellation. I have worked with clients where they take only one up front payment, and it was the same amount, regardless of whether the contract was $1000 or $20000. That is an example of a weak LDC. Why? Because your likely not going to see any more money out of the client, so the less money you take in during the duration of the contract, the less money you will have should the event be cancelled. Need more convincing about this? Watch me talk about it here and here.

So what is the optimal way to handle payment? Calculate multiple installments based on your OVERALL RISK throughout the duration of the contract.

Let’s break that down. First, what do I mean installments? Installments mean taking money from the client at 3 or 4 different times during the duration of the contract.  There is no law that says you have to take money on the day of the signing and the day of the event. Obviously, the more times you take money from the client, the more you will have if it the event is cancelled. Watch me talk about this topic a little more here.

Second, how do we calculate those installments? The amount per installment should be based on your OVERALL RISK that you have at ANY GIVEN POINT during the DURATION OF THE CONTRACT. This means looking at the AMOUNT OF TIME AND MONEY you have in the contract, while KEEPING IN MIND your ability to REBOOK the date.

Look at it this way, ONE DAY AFTER YOU SIGN the contract, you have very little risk. You theoretically have spent no time or money on the client. The likelihood of you getting another job for that date is probably pretty good. Or at least as good as the one you just signed up, right? But, the DAY BEFORE THE EVENT you have the MOST risk. You’ve got nearly all of your time invested, and the chances of you booking another event for the next day is about the same as me regrowing my hair. The more and more risk you have, the more money you should be taking in. Figure out where your risk is, and spread the payments out accordingly.