Legal Question in Business Law in California

I reserved a dance hall for my daughters sweet 16th about a year ago. The date was set for 10/18/14. A family emergency has caused us to cancel the entire thing. I gave the place a $800 down payment last year to reserve the date. Their contract states that $0 will be refunded if I cancel. Isn't it California law that says they cannot charge for services not rendered? Also, I'm giving them a full 7 months notice which should be plenty of time for them to find someone else for that day. Can they do that? What if they fill that time slot? Since they kept my money, can they still profit from it AND still keep my $800????


Asked on 3/17/14, 3:01 pm

2 Answers from Attorneys

Anthony Roach Law Office of Anthony A. Roach

California law, like common law, abhors a penalty. If a clause in a contract can be construed as a penalty, it is not enforced by the courts. Liquidated damages provisions, on the other hand, are enforced to the extent that the courts find that it is an adequate and appropriate estimation of a party's damages in the event of a breach.

I think you can sue, and most attorneys would advise you to sue in small claims court. Be advised, however, that you give up some rights by selecting such a forum, such as the right to appeal if you do not agree with the decision.

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Answered on 3/17/14, 3:36 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

So, is the $800 a "penalty" or a reasonable estimate of the dance hall's damages? I think before filing suit, I'd try to find out if they have been sued or even confronted on the $800 deposit forfeiture issue and with what results. Is the place heavily booked seven months in advance? It might be, and if so, the forfeiture might be a reasonable estimate of damages and therefore pass muster in court. What would the total fee have been, in addition to the $800? If we're looking at maybe an $8,000 bill and the place tends to sell out months in advance, the $800 deposit forfeiture looks like a realistic estimate of damages. If, on the other hand, the hall seldom sells out or only sells out a few weeks in advance, and/or your total rental might have been more in the $2,000 area, suit seems to be more in order and likely to win.

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Answered on 3/17/14, 8:23 pm


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