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bi-monthly
HPASA newsletter. |
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February/March 2011
WASTED
COSTS WHEN A BOOKED FUNCTION
IS CANCELLED: The New Consumer
Act Says …
By Hanlie
Kotze, STBB | SMITH TABATA BUCHANAN
BOYES |
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Cancellation of
a booked event can cost a caterer,
hotel or any other venue facility
a great deal in the way of wasted
time and costs. Against this background,
those in the hospitality industry
may find it alarming that the Consumer
Protection Act, which will become
fully operative on 01 April 2011,
affords consumers the right to cancel
any advance bookings and reservations.
What
recourse is there for the service
provider who suffers a loss as a result
of such a cancellation?
Section 17 of the Act allows a supplier
to require payment of a reasonable
deposit when a booking is made and
to impose a reasonable penalty in
respect of the cancellation of the
booking. |
What is a reasonable deposit and
penalty?
The Act gives guidelines on how to determine
a reasonable amount for purposes of the
deposit and penalty by indicating that a
charge will be unreasonable if it exceeds
what one would fairly expect to pay, taking
into account the following:
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the nature of the goods
or services booked; |
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the length of notice of cancellation
given by the consumer; |
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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 |
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the general practice in the industry.
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Important
But note, importantly, that you may not
impose any cancellation penalty if the consumer
is unable to honour the booking because
of the death or hospitalisation of the person
for whom, or for whose benefit, the booking
was made.
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