A couple paid a local wedding photographer a €200 deposit to secure a booking for their wedding the following year. Two months later, the couple had to postpone their wedding due to a sudden family emergency. They contacted the photographer to cancel the booking and asked that their deposit be refunded or at least credited towards a future date. However, the photographer said that the deposit was non-refundable, leaving the couple unsure of their consumer rights.
This couple’s experience raises important questions: can clauses making deposits non-refundable be included in consumer contracts? And how does consumer legislation protect consumers in such situations?
Just because a clause is included in a sales contract does not automatically make it legally enforceable. For a business to be entitled to retain a consumer’s deposit, the terms must be fair and reasonable.
The amount of the deposit itself is also relevant. In the example described above, the deposit is relatively small and likely serves only as a nominal fee to reserve the booked date. In this situation, it could be argued that the photographer turned down other potential bookings and may have also incurred administrative costs related to the reservation. If this can be proved, the photographer may be legally entitled to retain the deposit and would not be obliged to provide a refund or accept the couple’s request for a credit note.
Conversely, in situations where the deposit paid is disproportionately high compared to the overall cost of the service or product, consumers may have the right to claim a partial refund. This applies where the trader’s decision to retain the full deposit would result in compensation that is excessive or unreasonable in relation to the actual value of the goods or services purchased or hired.
In such cases, retaining an excessive amount of the deposit could constitute unjustified enrichment.
In this context, it is also important to note that consumer legislation considers certain contract terms to be unfair. In particular, terms that allow the trader to retain money paid by a consumer when the latter cancels a contract, without providing the consumer with a right to receive equivalent compensation if it is the trader who cancels the contract.
In addition to the situations outlined above, consumers may sometimes also find themselves in circumstances where, after a deposit has been paid, the trader fails to supply the product or provide the service in accordance with the sales contract. In such cases, consumers are entitled to a refund of the deposit paid and may also hold the trader liable for any additional costs incurred as a direct result of the trader’s breach of contract.
“Retaining an excessive amount of the deposit could constitute unjustified enrichment”
This can be illustrated by the following case:
A consumer paid a €250 deposit to a local catering company to provide food and service for a birthday party, scheduled for a specific date and time and confirmed in writing. Two days before the event, the caterer informed the consumer that they would no longer be able to provide the service due to internal staffing problems and offered no suitable alternative. As a result, the consumer had to book another caterer at a very short notice and at a higher price so as not to cancel the party.
In this situation, the trader failed to provide the service as agreed in the sales contract.
The consumer was therefore entitled to a refund of the deposit paid and may also claim the additional costs they incurred due to the trader’s breach of contract.
In order to successfully pursue such a claim, consumers may be required to provide evidence that the trader failed to honour the contract, usually by presenting the original sales agreement. For this reason, it is particularly important that sales contracts are concluded in writing and clearly set out all the agreed terms, including a detailed description of the product or service, the agreed delivery or performance date and the total price to be paid.
Paying a deposit is a standard part of many purchase and service agreements.
As highlighted in the examples above, it is essential for consumers to be aware of their rights and responsibilities when making such payments.
In cases where a dispute arises over a deposit, or where consumers are uncertain about their legal rights, they can seek guidance and support from the Office for Consumer Affairs at the MCCAA.
Odette Vella is director, Information, Education and Research Directorate, MCCAA.
