As the cost of living skyrockets, one woman said the “shady” city is full of hidden costs, including when she recently got $100.
Welcome to Sisters In Law, news.com.au’s weekly column that solves all your legal problems. This week, our house attorneys and real life sisters Alison and Jillian Barrett of Maurice Blackburn are advising whether restaurants can charge a cancellation fee after booking.
I live in Sydney and enjoy going out for lunch or dinner to try new restaurants. I’ve noticed more and more restaurants are charging $50 to secure a booking that won’t be charged unless you don’t show up or give 12 hours notice to cancel the booking.
The problem is, since Covid is still prevalent, it’s not always possible to know hours in advance if you need to cancel.
Recently I booked a table for six and last minute two people had to cancel because they got Covid. The restaurant charged me $100 for their no shows even though I called them and apologized as soon as I found out.
Sydney has always had a reputation for being a money grabber, but even by Sydney’s standards this feels shady! Is it even legal? —Rose, NSW
This practice of restaurants charging a reservation fee to guarantee a reservation is becoming more common, especially since the pandemic.
The purpose of a non-refundable fee is to cover a portion of the restaurant’s loss if the reservation is canceled at the last minute or in the event of a no-show.
If a diner without this fee changed their mind only to go to the restaurant, there would be little reason for them to give the restaurant sufficient notice of their cancellation, and the restaurant would lose money by making the table wait. arrive at the dinners.
In some situations, such cancellation fees may be legally charged by a venue.
When you make a booking, you are entering into a contract with the venue, even if it is not written or booked online. A telephone booking is an oral contract.
As such, each contract contains terms and conditions that must be fair under Australian consumer law.
As in many jurisdictions, there is a lot of gray and what is “fair” depends on the specific situation.
Different locations have different types of cancellation policy, and some have none at all, so you should read all the terms carefully before making a booking and note all relevant cancellation terms.
If the restaurant doesn’t advise you on their cancellation policy or make it clear to you (in writing or, if you called to make the reservation, then over the phone), then the contract is likely to be considered unfair and unenforceable, hence you would be entitled for a full refund.
The other aspect of this booking fee that could make them illegal is the amount that will be charged upon cancellation.
The non-refundable amount should only reflect the restaurant’s reasonable wasted costs and should not be excessive.
Anything other than this could be seen as an unfair contract term or penalty, which would be unenforceable.
For example, recovering the cost of a small amount of food ordered to prepare a meal may be considered reasonable under the law, while charging the full menu price of a three-course meal to each guest would likely be unfair. since it would likely exceed the cost of the meal.
Another factor to consider is the time frame provided by the restaurant to cancel the reservation without penalty.
Since restaurants must pre-order supplies and prepare for dinner in advance, 12 noon, as stated in your query, may be a reasonable time frame to impose a non-refundable policy.
That said, if you had the entire restaurant booked up for an event, then a longer time limit set by the restaurant could be seen as reasonable, as well as higher cancellation fees.
Another factor to consider when considering whether the cancellation policy is reasonable is the restaurant’s ability to minimize its losses by, for example, rebooking other customers.
What to do if you find yourself in this situation again, of course these types of disputes can always be better resolved by contacting the restaurant directly.
Assuming you’ve been made aware of their policies, if you cancel, you may be able to negotiate something that suits both of you, especially if they want to keep you as a customer.
In that regard, you could specifically request that they give you a credit for the cancellation or rebook with the booking fee for another date. You might even offer to buy some extra food to take away for the guests who couldn’t attend.
It is best to have all oral communications followed up in writing and ensure that you keep records.
If you’re not happy with the restaurant’s response, you can threaten the issue and eventually escalate it by filing a complaint with NSW Fair Trading and the Australian Competition and Consumer Commission (ACCC).
They will review your complaint and decide if they can assist you in reaching a resolution with the restaurant.
If you are unable to do so, your rights under the Australian Consumer Laws described above may be enforced if you refer the matter to the NSW Civil and Administrative Court.
If you were asked for credit card information when making the reservation, but were not told that your card would be charged if you canceled, it could be considered an unauthorized transaction.
In this case, you must contact your credit card company and request a “chargeback” for “services not provided”. The provider will investigate and handle the dispute for you.
At the end of the day, remember that consumers have an incredible power to exert influence, including choosing whether or not to dine at restaurants with these kinds of cancellation policies.
This legal information is of a general nature and should not be construed as specific legal advice or relied upon. Individuals who need specific legal advice should consult a lawyer.
If you have a legal question that Alison and Jillian would like to answer, please email email@example.com
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