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Being charged for cancelling a reservation...


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On a little side issue, does anyone else find the increasing need to have a credit card to do anything annoying?

No.

I think that credit card bookings are entirely reasonable. You don't go on holiday without booking and paying for it - you take out insurance for last minute cancellations. By taking a credit card, the restaurant is taking out insurance.

I can't help but think back to one of the initial points that Clerkenwellian came up with. HE/SHE HAD TO CANCEL BY 2.00PM - HE/SHE PHONED AT 3.00PM. Please help me here. What part of 2.00pm was not undserstood?

To me, the initial phone call comes into the realms of contract law in England. An offer and acceptance took place. Consideration (legal def.) on both parts would have taken place if C had eaten there. However, C broke the contract, and therefore had to pay consideration as per the original contract to the restaurant.

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There might be a question if they hadn't mentioned how high their cancellation fee was.

I'm not shocked by the fee. There are much higher in London/England.

I don't agree that the even though the table may have been filled at a later stage a charge should not have been levied.

Time has been taken in that afternoon by the whole staff on the basis that the booking had been made and not cancelled by the stipulated time. Tables may have been laid, seating plans arranged - then re-arranged because of the cancelled table, telephone calls made to people that may have been on a waiting list. The charge is fully justified on that basis.

I've no idea what area of law that Clerkenwellian practices in, but I'd be intrigued to know what he'd/she'd advise on this matter if the restaurant in question were his/her client:hmmm:

Edit for typo.

Edited by Scottf (log)
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The reason why restaurants (majority of them) ask for a deposit is not to pocket on the customer’s expense but to guarantee the courtesy of a phone call in the event of a cancellation.

Ridiculous charges should be dismissed in the first place (by not making a reservation in that particular restaurant) and also the charge should be established and agreed beforehand (generally, it shouldn’t be more that £10 p.p, normally applied in the event of large parties).

A restaurant should always consider the good will of the customer, as in the majority of the cases there is a valid reason behind the last minute cancellation. In this particular case, I think it was unfair being charged because the phone call was made 1 hour late from the time established, and also no charge should be applied if the table gets replaced.

As far as the legal side, it seems a grey area. I have always known that customers can refuse to pay the charge, unless they have signed a form where they agree to pay the late cancellation fee (please correct me if I’m wrong).

At the end of the day, I think it all comes down to ethics. It has to be said that those who find immoral a last minute/no show charge should also consider dishonest the same behaviour that attracted it.

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Hm. That is rather a hefty fine. Obviously it's the type of fine that only a restaurant popular enough to operate on that level of arrogance could levy.

It's legal, yes, but is it smart? I really don't mind being asked for my CC when I book a restaurant. However, I *do* mind when it becomes yet another way to gouge the consumer--like all those excessive hotel fees. I've booked a number of high-end inns and B&Bs that have strict cancellation policies, but they usually state that, minus a small cancellation fee, they won't charge if the room can be re-booked. In the case of this restaurant, I don't see how they can justify charging a per person fee other than to hide behind a facade of snootiness.

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It seems unfair to name the restaurant, but it rhymes with "kvetch".

To put this into a charge context, I think it fair to advise that if this is the restaurant I guess it to be from this 'clue', then dinner is in the realm of £200-300/$380-550 per person.

A £20/$36 cancellation covers what I said previously - time wasted by the restaurant in thinking they had a table booked booked by the time stipulated.

I think that the true name of this establishment should be named and that the "Egullet Staff" email them this thread.

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I wouldn't want to short circuit Clerkenwellian's direct approach at this point. This is an issue for him to resolve with the restaurant first, then maybe the thread can be bought to their attention. Who knows, they may already have seen it.

I think its far more interesting and valid to discuss the general phenomenon of cancellation charges rather than try and decide the rights and wrongs of a particular case where we only have one version of events.

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I wonder if the restaurant would have deducted a portion of your bill if you'd showed up for the reservation on time and were subsequently seated 15-20 minutes late.

=R=

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On a little side issue, does anyone else find the increasing need to have a credit card to do anything annoying?

No.

I think that credit card bookings are entirely reasonable. You don't go on holiday without booking and paying for it - you take out insurance for last minute cancellations. By taking a credit card, the restaurant is taking out insurance.

I can't help but think back to one of the initial points that Clerkenwellian came up with. HE/SHE HAD TO CANCEL BY 2.00PM - HE/SHE PHONED AT 3.00PM. Please help me here. What part of 2.00pm was not undserstood?

To me, the initial phone call comes into the realms of contract law in England. An offer and acceptance took place. Consideration (legal def.) on both parts would have taken place if C had eaten there. However, C broke the contract, and therefore had to pay consideration as per the original contract to the restaurant.

The legal situation isn't that simple. This counts as a liqiudated damage claim which must be reasonable. If it is £30 then it is reasonable related to the gross profit, or some fraction of the gross profit that corresponds to the chance of the table remaining unfilled.

And taking the credit card isn't really 'insurance' -- they are just taking care of the credit risk of the cancellation charge being unpaid.

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On a little side issue, does anyone else find the increasing need to have a credit card to do anything annoying?

No.

I think that credit card bookings are entirely reasonable. You don't go on holiday without booking and paying for it - you take out insurance for last minute cancellations. By taking a credit card, the restaurant is taking out insurance.

I can't help but think back to one of the initial points that Clerkenwellian came up with. HE/SHE HAD TO CANCEL BY 2.00PM - HE/SHE PHONED AT 3.00PM. Please help me here. What part of 2.00pm was not undserstood?

To me, the initial phone call comes into the realms of contract law in England. An offer and acceptance took place. Consideration (legal def.) on both parts would have taken place if C had eaten there. However, C broke the contract, and therefore had to pay consideration as per the original contract to the restaurant.

please read my earlier posts. Even if I agreed to a cancellation fee on these, unusual, terms (which I didn't) under a correct contract law analysis their "cancellation fee" is a penalty and hence unlawful.

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I wonder if the restaurant would have deducted a portion of your bill if you'd showed up for the reservation on time and were subsequently seated 15-20 minutes late.

=R=

The lack of reciprocity in the terms of the contract purportedly created by the telephone conversation (i.e. that if I cancel I pay £20, but if they cancel they don't pay me anything) is why I thought the contract might be unlawful under the Unfair Terms in Consumer Contract Regulations. Penalties that are imposed on the consumer only are stated to be prima facie unfair in the OFT's guidance on the UTCCR.

This point is of academic interest only in my case (as the fact the fee is charged irrespective of the restaurant's loss makes it an unlawful "penalty"). However this lack of reciprocity may mean that cancellation fees are, technically, unlawful even if they are only charged when a restaurant cannot find replacement diners. For what it's worth, this doesn't seem to me to be a particularly fair result for the restaurant.

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It seems unfair to name the restaurant, but it rhymes with "kvetch".

To put this into a charge context, I think it fair to advise that if this is the restaurant I guess it to be from this 'clue', then dinner is in the realm of £200-300/$380-550 per person.

A £20/$36 cancellation covers what I said previously - time wasted by the restaurant in thinking they had a table booked booked by the time stipulated.

I think that the true name of this establishment should be named and that the "Egullet Staff" email them this thread.

We were booked in the cheapo bit of the restaurant: think more like £45 per person.

Thanks for the suggestion, but I'd rather make an informal approach to the restaurant at this stage.

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On a little side issue, does anyone else find the increasing need to have a credit card to do anything annoying?

No.

I think that credit card bookings are entirely reasonable. You don't go on holiday without booking and paying for it - you take out insurance for last minute cancellations. By taking a credit card, the restaurant is taking out insurance.

I can't help but think back to one of the initial points that Clerkenwellian came up with. HE/SHE HAD TO CANCEL BY 2.00PM - HE/SHE PHONED AT 3.00PM. Please help me here. What part of 2.00pm was not undserstood?

To me, the initial phone call comes into the realms of contract law in England. An offer and acceptance took place. Consideration (legal def.) on both parts would have taken place if C had eaten there. However, C broke the contract, and therefore had to pay consideration as per the original contract to the restaurant.

Scott,

I can't help but feel you've not really taken in whats already been discussed.

The nature of trade for a holiday is soooo different as to not be comparable to a restaurant. Holidays are things booked, often considerably, in advance, and as such a booking is more permanent in nature. The cash flow implications for the company are set, often there are FX hedging obligations to meet, and to a certain degree discounts may be offered for advance payment. The amount of revenue is set. Now what about this resembles a restaurant booking?

The contract stuff also seems to miss the point, offer and acceptance is not what this is about. the point is that it is not legal to enter into such a contract, thus rendering acceptance and offer entirely meaningless.

Also note, that if a contract had been entered into, (it hadn't) the quantum of any penalty cannot be implied into the contract. The cancellation fee is not the consideration, it's the punitive action. The consideration is payment for the meal.

Your point of view seems to favour punishing a bad customer, which is neither legal nor good business sense.

A meal without wine is... well, erm, what is that like?

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Does anyone really not believe that no shows are a huge cost to restaurants? Some restaurants in NY average as high as a 30% or more as a no show rate. I don't know about the situation anywhere but NYC and this may not be applicable to London/England (though I suspect it is), but the no show rate in NYC is alarming and out of control. There is only so much a restaurateur can do, i.e., call to confirm reservations, without taking harsh measures. I really don't get any argument that does not support no show charges, and many here seem to support that side. To make a general statement that a no show charge is equivalent to a penalty is ridiculous. [i'm not talking about this individual case.]

The nature of trade for a holiday is soooo different as to not be comparable to a restaurant.  Holidays are things booked, often considerably, in advance, and as such a booking is more permanent in nature

I don't get it. The argument that hotels or airlines are a different animal than restaurants, particularly hotels, makes no sense to me. What's the difference how far in advance a booking is made? Besides, there are numerous restaurants that must be booked far in advance. What about special events, like New Years Eve or Valentines Day? Some restaurants book months in advance and will suffer a considerable loss from a no show.

Your point of view seems to favour punishing a bad customer, which is neither legal nor good business sense.

As I stated earlier (and Scottf I think), just because a restaurant is able to fill a table despite a no show is irrelevant to the no show charge. And it is not a penalty. Scottf described some of the charges that a restaurant incurs as a result of a no show, even if the table is filled. I'll add to that the burden put on a restaurant to prove that it suffered a loss --- if a restauarant is booked on a particular evening and has 10 no show tables and ends up filling up 8 of them, how is the restaurant supposed to allocate which customers' tables were able to be filled despite the no show? Even a charge of $25 per person mostly won't make up for the lost revenue.

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The contract stuff also seems to miss the point, offer and acceptance is not what this is about. the point is that it is not legal to enter into such a contract, thus rendering acceptance and offer entirely meaningless.

Also note, that if a contract had been entered into, (it hadn't) the quantum of any penalty cannot be implied into the contract. The cancellation fee is not the consideration, it's the punitive action. The consideration is payment for the meal.

Your point of view seems to favour punishing a bad customer, which is neither legal nor good business sense.

It is legal -- the particular term relating to the penalty -- if it is a penalty -- is not binding.

The cancellation fee is clearly not the consideration -- you are right there.

If it is punitive then it is not binding -- but £20 or whatever seems reasonable not punitive and therefore binding.

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I don't get it. The argument that hotels or airlines are a different animal than restaurants, particularly hotels, makes no sense to me. What's the difference how far in advance a booking is made?

Glenn,

perhaps you don't. but I think i made it explicitly clear why they are different.

A meal without wine is... well, erm, what is that like?

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The contract stuff also seems to miss the point, offer and acceptance is not what this is about.  the point is that it is not legal to enter into such a contract, thus rendering acceptance and offer entirely meaningless. 

Also note, that if a contract had been entered into, (it hadn't) the quantum of any penalty cannot be implied into the contract.  The cancellation fee is not the consideration, it's the punitive action.  The consideration is payment for the meal.

Your point of view seems to favour punishing a bad customer, which is neither legal nor good business sense.

It is legal -- the particular term relating to the penalty -- if it is a penalty -- is not binding.

The cancellation fee is clearly not the consideration -- you are right there.

If it is punitive then it is not binding -- but £20 or whatever seems reasonable not punitive and therefore binding.

Legal but not binding...?

A meal without wine is... well, erm, what is that like?

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As I stated earlier (and Scottf I think), just because a restaurant is able to fill a table despite a no show is irrelevant to the no show charge. And it is not a penalty.

Glenn,

once again I think this has already been adequately explained.

A meal without wine is... well, erm, what is that like?

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I think it's reasonable (subject to amount of course) - after all they don't charge if you cancel at 13.59 but they don't let the table.

We went to the Seafood Restaurant (and booked a room there for 3 nights) in Padstow for my husband's 40th -but my husband celebrated so enthusiastically at his family party before we set off that we missed the first night (!). They didn't charge us for that night even though they didn't let the room, which impressed me

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The contract stuff also seems to miss the point, offer and acceptance is not what this is about.  the point is that it is not legal to enter into such a contract, thus rendering acceptance and offer entirely meaningless. 

Also note, that if a contract had been entered into, (it hadn't) the quantum of any penalty cannot be implied into the contract.  The cancellation fee is not the consideration, it's the punitive action.  The consideration is payment for the meal.

Your point of view seems to favour punishing a bad customer, which is neither legal nor good business sense.

It is legal -- the particular term relating to the penalty -- if it is a penalty -- is not binding.

The cancellation fee is clearly not the consideration -- you are right there.

If it is punitive then it is not binding -- but £20 or whatever seems reasonable not punitive and therefore binding.

Legal but not binding...?

Sorry that was very unclear.

The contract will be legal and binding; but the particular term relating to the penalty (if such it is) will not be enforced. However in this case, it seems to be reasonable as an estimate of loss so it probably is valid. (IANAL)

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The contract stuff also seems to miss the point, offer and acceptance is not what this is about.  the point is that it is not legal to enter into such a contract, thus rendering acceptance and offer entirely meaningless. 

Also note, that if a contract had been entered into, (it hadn't) the quantum of any penalty cannot be implied into the contract.  The cancellation fee is not the consideration, it's the punitive action.  The consideration is payment for the meal.

Your point of view seems to favour punishing a bad customer, which is neither legal nor good business sense.

It is legal -- the particular term relating to the penalty -- if it is a penalty -- is not binding.

The cancellation fee is clearly not the consideration -- you are right there.

If it is punitive then it is not binding -- but £20 or whatever seems reasonable not punitive and therefore binding.

Legal but not binding...?

Sorry that was very unclear.

The contract will be legal and binding; but the particular term relating to the penalty (if such it is) will not be enforced. However in this case, it seems to be reasonable as an estimate of loss so it probably is valid. (IANAL)

Except that these charges are NOT legal or binding.

the charge is not related to loss, nor has an agreed method for calculating loss been worked into the contract.

Edited by Scott (log)

A meal without wine is... well, erm, what is that like?

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The contract will be legal and binding; but the particular term relating to the penalty (if such it is) will not be enforced. However in this case, it seems to be reasonable as an estimate of loss so it probably is valid. (IANAL)

The Court of Appeal doesn't agree with you: "[a penalty clause] will not be enforced... beyond the sum which represents [the] actual loss" (Jobson v Jobson (1989)).

If the restaurant was (as is likely to be the case) full on the night in question, then the only actual loss resulting from the cancellation will be the administrative costs of making/cancelling the reservation. I find it hard to believe these amount to £20 per cover, where the average per person bill is around is £50.

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