Cancellation of a booking/reservation under the Consumer Protection Act – a discussion on Section 17 of the Consumer protection Act, Act 68 of 2008.

“My fiancé and I booked or reserved a wedding venue for our wedding scheduled in December 2022, however since December 2021 we have been experiencing problems in our relationship and as a result, we agreed to end our engagement and subsequently cancel our reservation with the wedding venue. We have already paid a non-refundable deposit and an amount of R80 000.00 towards the event to the Wedding Venue and are concerned that this amount will be forfeited if I cancel. What do we do?.

Section 17 indicates that a consumer has the right to cancel any advance booking, reservation or order for any goods or services to be supplied, subject to the following:

• A supplier who makes a commitment or accepts a reservation to supply goods or services on a later date may require payment of a reasonable deposit in advance; and impose a reasonable charge for cancellation of the order or reservation, subject to subsection (5).
• Subsection 5 states that a supplier may not impose any cancellation fee in respect of a booking, reservation or order if the consumer is unable to honour the booking, reservation or order because of death or hospitalization of the person for whom, or for whose benefit the booking, reservation or order was made.
• Section 17 (3) and Section 17 (4) sets out certain restrictions and natural causes which flow from the cancellation if not excepted by subsection 5, which in a nutshell are as follows:
  • The consumer remains liable to the supplier for any amounts owed to the supplier in terms of that agreement up to date of the cancellation and the supplier may impose a reasonable cancellation penalty.
  • The supplier may not charge a penalty which would have the effect of negating the consumer’s right to cancel a fixed term consumer agreement.

Regulation 5(3) of the CPA provides that penalty or charge as contemplated in section 14 may not exceed a reasonable amount, taking into account the following factors:

• The amount which the consumer is still liable to the supplier up to date of cancellation;
• The value of the transaction up to cancellation;
• The value of the goods which will remain in the possession of the consumer;
• The value of the goods that are returned to the supplier;
• The duration of the consumer agreement initially agreed;
• Losses suffered by or benefits accrued by the consumer as a result of the agreement;
• The nature of the goods or services that were reserved or booked;
• The length of notice of cancellation provided by the consumer;
• The reasonable potential for the service provider, acting diligently, to find an alternative consumer between the time of receiving the cancellation notice and the time of the cancelled reservation; and
• The general practice in the relevant industry.

I pause to mentioned that these factors do not define a reasonable cancellation penalty, but provide guidelines for determining what would constitute a reasonable cancellation penalty on a case-by-case basis.

Taking the above provisions in order, it should be clear that the reason for cancellation as set out above is not due to the death of anyone of the parties, which thus cause that subsection 5 is nor applicable and that the Wedding Venue can now claim a reasonable penalty fee.

Now in order to assess if the cancellation fee charged by Venue is reasonable a factual and objective assessment must be done taking the factors of regulation 5(3) of the CPA into account and applying same to the facts at hand. The supplier does not have a discretion to determine the impact of the factors relevant to what constitutes a reasonable cancellation penalty.

It needs further to be mentioned that the supplier should be able to show what losses or costs were incurred as a direct result of the cancellation, such as time spent with the couple, an apportion of costs of marketing and administrative costs.

In light of the above it is strongly advised that prior to cancellation you approach an attorney with the necessary experience with the CPA to draft a proper letter taking the factors set forth in regulation 5(3) of the act into account when cancelling the booking on your behalf.

Reference List:

• CPA, Act 68 of 2008