Cancellation Charges

[sinon]

Hi All,

today I cancelled a holiday I booked last year. Change in financial circumstances making it unavoidable.

Thankfully I cancelled more than 56 days before flying, so only incur the lowest charge, but still £130 per person, £520 in total.

Would it be reasonable to write and ask how they calculate their charges?

I don't mind paying, but do like to know what I am paying for.

Regards, Simon.

[Stuart Green]

My sisters in laws neice was supposedly getting married in Cancun, there was a group of about 13 of themg going but due a change in her nieces finances, they are not getting married.

 

So some of the group are still going (They were all subject to a fee of £50...I believe) Some have changed destinations (Which cost an additional £35..I think)

 

My sister laws and her 2 kids (My neice & nephew) have cancelled as she doesn't want to go anywhere, but the holiday company want her to fork out

£260 in deposits for cancelling.

 

She has given them plenty of notice as the holiday was booked for June.

 

So can she used the same law that are being used for banks??

 

I will be keeping an eye for some help on this one.

 

Cheers

 

Stu

[MARTIN3030]

Hi All,

today I cancelled a holiday I booked last year. Change in financial circumstances making it unavoidable.

Thankfully I cancelled more than 56 days before flying, so only incur the lowest charge, but still £130 per person, £520 in total.

Would it be reasonable to write and ask how they calculate their charges?

I don't mind paying, but do like to know what I am paying for.

Regards, Simon.

 

 

There is nothing wrong with requesting a breakdown.

Its quite likely that they will quote admin charges,but again ask them to substantiate them.

[rosiecotton]

Don't forget that this would differ from bank charges due to the potential to claim for loss of profit. Loss of profit isn't really something that would apply to bank charges, but would apply in this case unless the company were able to re-sell the holiday at the same price.

 

Effectively you are in breach of contract and therefore liable to pay reasonable damages - which could, as I say, include loss of profit - but the trader must try to mitigate their losses. For example, if they have re-sold your holiday at the same price, they would not be able to claim for loss of profit as the loss would be zero. They could only then claim reasonable admin costs which they would ultimately need to prove.

[NFMac]

I have to disagree...it's not a breach of contract as cancellation charges will be clearly detailed in the terms and conditions in the brochure.

 

When you buy the holiday, you agree that you will 'lose' money if you cancel on a sliding scale that increases the closer to the departure date.

 

Holidays companies will try to resell that holiday/flight seat but they're under no obligation to refund you anything if they do so.

[rosiecotton]

I have to disagree...it's not a breach of contract as cancellation charges will be clearly detailed in the terms and conditions in the brochure.

 

When you buy the holiday, you agree that you will 'lose' money if you cancel on a sliding scale that increases the closer to the departure date.

 

Holidays companies will try to resell that holiday/flight seat but they're under no obligation to refund you anything if they do so.

 

See, I disagree with this - as to say that they will make those charges regardless is an unfair term - they should only legally be able to claim their actual losses (which will include loss of profit). If I was in the OPs position and found that they had mitigated their losses and sold the holiday to someone else for the same price, I would certainly take the case as far as court if necessary to reclaim back the charges less an amount for their actual proven financial losses.

 

Finding out that information about whether they have sold it on is the tricky thing though!

[NFMac]

Rosie...you could take it to court but you would lose.

 

Simply saying it's an 'unfair term' does not mean it that it's in breach of the UCTA.

 

The terms and conditions are printed clearly in the brochure, they're very standard throughout the travel industry (and conform to ABTA's Code of Conduct, which you may disagree with but would be respected by any court), and the consumer/holidaymaker is under no obligation to enter into the contract if they disagree with it.

 

I'd also say it's a very reasonable term. Tour Operators and hoteliers need to know that their planes and hotels will be full. If people had the right to cancel without having cancellation charges applied then people would simply book holidays and then cancel them with no 'punishment' as soon as they changed their minds.

 

Airlines sell flight tickets like this but these are the most expensive possible because they come with that flexibility.

 

And...why shouldn't the tour operator sell the holiday again? If the holiday had to be cancelled for an insurable reason and the person got their money back, why shouldn't they sell on that holiday? They're not going to keep the flight seat and hotel room empty. The margin of profit on cancelled holidays is there for the holiday companies and that is one of the reasons why costs can be kept to a competitive level for us consumers.

[rosiecotton]

I bet I wouldn't lose, if I could prove that the company had sold my holiday to someone else. Why should they profit twice?

 

In any breach of contract - which this is - a company can claim for their losses, which may include loss of profit. But there is no loss of profit if they have re-sold the same thing to someone else at the same price.

 

The tricky bit, of course, would be being able to prove that they had re-sold the holiday to someone else at the same price. That would be the only stumbling block that I could see.

 

I'd also say it's a very reasonable term. Tour Operators and hoteliers need to know that their planes and hotels will be full. If people had the right to cancel without having cancellation charges applied then people would simply book holidays and then cancel them with no 'punishment' as soon as they changed their minds.

 

See, you miss my point - I am only saying that they cannot profit twice from selling the same holiday. If people cancel holidays (and are in breach of contract) then of course they are responsible to pay for the trader's losses - but the trader still has to mitigate those losses (reduce them as much as possible) wherever possible.

 

Example: If you ordered a washing machine costing £350 and paid £100 deposit, then you changed your mind and rang the store telling them that you didn't want it any more - would it be fair for the store to keep that £100 and then sell that same washing machine to another customer for £350? No, the store's losses are zero and therefore they should refund the customer the £100. Yes, the customer was in breach of contract, but the store did not lose out as a result.

 

If, however, they could only sell the washing machine at £250 in the sale, they could keep the £100 the previous customer had paid.

 

This is basic contract law, and it covers all contracts for goods and services made within the UK.

 

Holidays are not "special" and they're not exempt from contract law.

[NFMac]

Rosie...without being rude, it's pretty clear that you don't have much clue as to the very basics of contract law.

 

A contract is a voluntary agreement between two parties. Let's look at the washing machine analogy.

 

It's there in the shop with a sticker price of £350.00. That's the 'invitation to treat'.

 

The customer 'offers' to buy the washing machine. The seller 'accepts' that offer subject to certain terms (a non-refundable deposit of £100.00). At that stage the buyer can disagree with those terms and withdraw but if he carries on then he's obligated to the terms. The money then changes hands and that is the 'consideration'. It's pretty textbook stuff.

 

There is absolutely no provision in English law for people to 'change their minds'. If that person decides they no longer want the washing machine, then the seller is under no obligation to offer a refund whether or not he sells that same washing machine or not. Whether he sells it or not (or whether the holiday is sold or not) is a complete irrelevance.

 

And you're right, it's impossible to know whether the washing machine has been sold or not. If he has a stock of 1 or 100, using your anaolgy, would he have to refund the person if he sold the first or the 100th? The same with the holiday, the flight seats might be sold to someone else with a different combination of hotel rooms or as a flight-only. The flight seats and hotel stock might be released back to the airline and tour operator.

 

You might disagree with the ethics or business principles of the washing machine seller (or the holiday company) in not offering a refund but it does not make it a breach of contract and does not make the terms 'unfair'.

[rosiecotton]

With respect, I actually work in this field and have full professional legal training and qualifications, and advise people on contract law matters on pretty much a daily basis.

 

I did not say there was provision in law for people to change their minds! If they do change their mind, there is a breach of contract (as in this holiday case). The trader is then liable to keep damages to cover their losses. But only to cover their actual losses! They cannot levy an arbitrary amount of damages. I'm sorry, but you are wrong to think this.

 

I have seen, and assisted in, several court cases along these very lines and the judge will only award damages to cover the trader's actual losses. This can include loss of profit if it applies.

 

Yes, there is an issue of proof, which I have already brought up. It's hard to prove that the holiday, in this case, has been re-sold at the same price. But the concept is not incorrect.

 

And nowhere did I ever say that the trader was in breach of contract. I think I made it pretty clear that the OP was the one in breach of contract. The issue here is the damages that the trader is entitled to claim.

[NFMac]

I think we'll have to agree to disagree...

 

My opinion is that this is not a breach of contract as the consumer and the tour operator agreed on a contract and within that contract there was specific provision for the charges that would be incurred by the consumer if he/she decided to cancel.

 

That provision will have given a specific amount which the consumer would 'lose' if they cancelled. These figures increase the closer to the date of departure. To me, this is not an arbitrary figure.

 

I also don't think this term could be described as unreasonable. Plus, there was ample opportunity for the consumer to question the specific charges before agreeing to the contract; my guess is that he/she didn't bother to read them beforehand.

 

And finally, I think it's common knowledge that in the event of any product being returned that it gets 'returned to stock'. I don't agree that there's any obligation for the seller to refund any sell-on revenue that might be made.

[rosiecotton]

That's your opinion, however there is an obligation on traders to mitigate their losses in any breach of contract so it's neither here nor there whether you agree with this or not.

 

One thing we do agree on is that it is unlikely that the OP would get their money back, but I would say this is entirely down to not being able to prove whether the holiday was re-sold.

 

I posted that as a possibility as I wasn't sure if there was any way to tell whether this was the case - I don't tend to take holidays! - but if the flights and hotels etc tend to be split up anyway it might be nigh on impossible to tell if the company had mitigated their loss and therefore pretty pointless taking it to court without proof.

[NFMac]

Please explain to me how and why there is a breach of contract when there is a specific clause within the contract which allows the customer to cancel (and losing their deposit)?

[rosiecotton]

I really don't like these terms and conditions and that's why I would happily query them.

 

If you signed up for having windows installed, paying a £3000 part payment towards a £6000 job, then later had concerns about the company, normally you would have to be in breach of contract and have to pay reasonable damages (very unlikely to be the full £3000).

 

Say the company had included a term in the contract which says:

 

"You may cancel the contract for any reason, however in doing so you will forfeit 50% of the amount of the contract"

 

Does this seem fair?

 

I can see why you argue that there hasn't been a legal breach in this case, however the terms could seem quite onerous.

 

I don't suppose it makes any difference to the OP anyway in the event, as it sounds very unlikely that he will be able to build an argument either way.

 

I suppose he could mitigate his own losses by passing the holiday on to someone else, if that was possible.

 

(NB, my point about mitigating loss in breach of contract cases was a more general one)

[NFMac]

Rosie...it's irrelevant that you 'don't like these terms' or if something 'seems fair' or not. The time to disagree with the terms is before agreeing to them.

 

There is no breach of contract so there is no need for any party to mitgate their loss.

[rosiecotton]

Not if the terms are unfair or onerous.

 

Companies can't just include whatever terms they like and then once it's signed it's just tough.

 

The example I gave would clearly be unfair under the Unfair Terms in Consumer Contracts Regs.

 

No doubt that holiday companies are entitled to a measure of damages in common law which would include a loss of profit element, but I still can't quite see why they should be able to include terms which may mean they profit twice on the same sale.

 

It is something that came up in my previous training and the lecturer then was also under the impression that if holiday companies do mitigate (and again there was the proof issue) then they ought to refund the consumer accordingly. Same with hotel accommodation etc. though this may be easier to prove whether they have sold the room.

 

I know what I'm trying to say, but it's getting late in the day now and I'm tired, and it won't help the OP any anyhow!

[demon_x_slash]

But isn't this the basic argument for the bank charges that is working so well at the moment? They have terms and conditions, they have a set scale of fees (penalties), and yet they are still subject to UK law which says that they cannot place themselves at an advantage over the other party, the consumer. They have to justify their charges as genuine pre-estimates of their losses arising from the consumer's breach of their T&Cs - surely that would also apply in relation to ANY contract relating to the consumer. If they re-sold the particular holiday that the OP cancelled, then their losses would be minimal, only costing however much manually changing names and details, and sending out the brochure to Consumer 2, would cost. It's not 'fair' (and therefore 'unfair', ha) to say: if you are in breach, this is what we will charge you regardless of circumstance. As far as I'm aware, only Our Lords in Government can do that...

 

PS rosiecotton, you've always given great advice on here and been very helpful to a lot of people...I think I'm going to stick with your opinion, as it's borne out so often before. No offence, NT

[NFMac]

Two-to-one! I'm being ganged up on!!!

 

Let me try and explain why I don't think the UCTA applies on this one and why it's different to the bank charges issue...

 

For a contract's terms to be declared as being 'unfair' they have to be completly 'unreasonable'. The UCTA and case law has generally held such things to be where one party has no viable alternative (eg. loans to vulnerable people with massive interest rates...not just because one party is a 'big' business and the other is a 'small' consumer), where the Ts and Cs are not disclosed, where an entire industry has worked in collusion or where the wording in the contract is contradictory or deliberately unclear.

 

With holidays people have the brochure or the website where the terms are printed. They're normally clearly written (many have been awarded the clear English award). Customers have an alternative (business class tickets offer flexibility...and are promoted strongly on this benefit). They are offered insurance which will cover for unexpected cancellations. They are under no obligation to book if they don't like the terms. The terms allow for a sliding scale of cancellation charges which will generally reflect reasonable costs.

 

The issue with the banks is different; people often opened their account many years ago and the bank charges were later applied to the ts and cs and, with people overdrawn, they were unable to close their account and move elsewhere...and if they did, all other banks were doing exactly the same.

 

Again, my argument is that if someone didn't like the proposed cancellation charges, they had the opportunity to not make the holiday booking in the beginning. To cancel later and then try to claim that the terms were 'unfair' is too late!

[androobe]

Two-to-one! I'm being ganged up on!!!

 

Let me try and explain why I don't think the UCTA applies on this one and why it's different to the bank charges issue...

 

For a contract's terms to be declared as being 'unfair' they have to be completly 'unreasonable'. The UCTA and case law has generally held such things to be where one party has no viable alternative (eg. loans to vulnerable people with massive interest rates...not just because one party is a 'big' business and the other is a 'small' consumer), where the Ts and Cs are not disclosed, where an entire industry has worked in collusion or where the wording in the contract is contradictory or deliberately unclear.

 

With holidays people have the brochure or the website where the terms are printed. They're normally clearly written (many have been awarded the clear English award). Customers have an alternative (business class tickets offer flexibility...and are promoted strongly on this benefit). They are offered insurance which will cover for unexpected cancellations. They are under no obligation to book if they don't like the terms. The terms allow for a sliding scale of cancellation charges which will generally reflect reasonable costs.

 

The issue with the banks is different; people often opened their account many years ago and the bank charges were later applied to the ts and cs and, with people overdrawn, they were unable to close their account and move elsewhere...and if they did, all other banks were doing exactly the same.

 

Again, my argument is that if someone didn't like the proposed cancellation charges, they had the opportunity to not make the holiday booking in the beginning. To cancel later and then try to claim that the terms were 'unfair' is too late!

 

I don't see the relevence of most of this. The T & Cs can be the clearest anyone has ever written anywhere, but this has absolutely no bearing whatsoever on how legal they are. I don't think anyone has claimed the banks charges have been unclear and are claiming them back on this basis?

 

Sliding scale of charges - some banks have these too - no penalty the first time you exceed your limit, so much the next time, and more again the third time. Again, this does not make them legal. Similarly if you are forced to pay a cancellation fee for a holiday and it then gets re-sold, the penalty clearly bears no relation to the losses incurred. Either it gets resold or it doesn't.

 

Again with the banks, no-one is forced at gun point to sign the T&Cs, but it's close to impossible to live without a bank account in this country these days, so we have to sign with someone. If you know of a bank which doesn't charge penalties (or only charges it's actaul losses of a few pence), please let us all know. The same applies to holiday companies, they all charge cancellation fees because they know they can get away with it, regardless of whether they have an actual loss or not.

[rosiecotton]

I don't see the relevence of most of this. The T & Cs can be the clearest anyone has ever written anywhere, but this has absolutely no bearing whatsoever on how legal they are. I don't think anyone has claimed the banks charges have been unclear and are claiming them back on this basis?

 

Sliding scale of charges - some banks have these too - no penalty the first time you exceed your limit, so much the next time, and more again the third time. Again, this does not make them legal. Similarly if you are forced to pay a cancellation fee for a holiday and it then gets re-sold, the penalty clearly bears no relation to the losses incurred. Either it gets resold or it doesn't.

 

Again with the banks, no-one is forced at gun point to sign the T&Cs, but it's close to impossible to live without a bank account in this country these days, so we have to sign with someone. If you know of a bank which doesn't charge penalties (or only charges it's actaul losses of a few pence), please let us all know. The same applies to holiday companies, they all charge cancellation fees because they know they can get away with it, regardless of whether they have an actual loss or not.

 

 

Spot on what I was going to say!

[Guest Zooman]

There is also a few other considerations to be placed.

 

when you booked this will have changed the availability of many places.

 

The outward flight (your booking will have changed the availability of seats), inward flight, the car hire company, the hotel you have booked for.

 

All of these factors will want some element of the cancellation fee, then there is the consideration of loss of profit and admin charges to the travel agent.

 

I own a hotel and enforce my cancellation policy strictly, every booking we take affects the availability of our hotel, it may be that a group of 10 rooms wanted to book to weeks after your booking, and this has to be declined due to the fact we know only have 9 rooms. And the factors are limitless, unlike someone selling new cars, we have a limited number of supplies we can make, and every contract we enter into to sell a room, affects the flow of those supplies.

 

This agument has stood up in court many times.

[Stuart Green]

Sorry I've not had the time to reposnd or even read these thread, but I just wanted to say thank you and I will respond and thank everyone properly, when I get a second....