When you cancel

Your risk management plan may include a number of potential evacuation triggers. This means you may choose to close your business and leave the premises even without a Code Red fire danger rating or similar.

As a result, you may cancel bookings in situations that do not trigger a frustrated contract. This could be seen as a breach of contract and may entitle your customers to a refund of their deposit and potentially other amounts covering other bookings that may be affected, such as car hire or activity costs.

In this situation, clearly advise your customers, in advance, of any circumstances in which you may cancel their stay, for example, by an explicit term or condition in your contract.

If you choose this option, you must ensure the terms or conditions:

  • Are fair within the meaning of the Australian Consumer Law (ACL)
  • Are clearly drafted and brought to the customer’s attention when the booking is made, as this will affect your ability to legally cancel a booking
  • Do not take away any rights that may arise as a result of the contract being frustrated

The customer may be entitled to claim damages from you as compensation for any loss they suffer as a result of your actions. It's always better to find an outcome that satisfies both you and your customer, without expensive legal processes.

Certain situations will allow you to cancel, for example, under a valid term of the contract or if the performance of the contract is frustrated as described on the When customers cancel page

Credit notes

If the customer is entitled to a refund, you cannot insist that they accept a credit note. For example, where the service has not been provided with due care and skill, and the problem is major or cannot be fixed easily or within a reasonable time.

If the guarantees have been met, and a credit note is appropriate under the circumstances, you will need to decide:

  • The validity period of the credit note
  • If it is transferable
  • If it can be used for other services
  • Any other special conditions
  • How to account financially for new bookings that extend into a new financial year

Transferring bookings

Your customer may be willing to postpone their visit. You should have a clear policy about what happens if the:

  • New date is in high season and more expensive
  • Customer makes repeated requests for different dates
  • Customer’s booking is associated with a function (for example, a wedding) to be held on or near your business premises

If your business is part of a group, such as a motel chain, you might offer an alternative to the customer that meets their needs. A hotel chain may be able to offer rooms in a different location; a resort could offer a different venue for a function. Ensure you are offering a good alternative, so your customers feel they are getting a good service and not being ‘shunted around’ or penalised.

Remember in some instances, a customer may be entitled to a refund as it may not be appropriate to transfer or postpone their booking.

Case study

A country homestead is hired out for a wedding function. On the day of the wedding, the area experiences flash flooding, which leads to the local river bursting its banks and submerging surrounding access roads. Neither the wedding party, nor any guests, are able to get to the property.

The homestead owner rings other venues in the area to determine whether the function can be relocated. Luckily, one is able to accommodate, however, being more upmarket there is an additional cost of $3,000.

The homestead’s contract states that, in the event that a booking needs to be modified (for example, because of an extreme weather incident) the customer is liable for any extra costs.

In this instance, the flash flood would have frustrated performance of the contract by the homestead owner, entitling the bride and groom to cancel their wedding, should they have wished. In that instance, they would have been entitled to a refund, minus any reasonable costs already incurred by the homestead owner, such as the cost of any catering or wages paid to staff.

However, they indicated that they were prepared to relocate the function to the alternative venue secured by the homestead owner and therefore agreed to pay the extra charge.

Last Updated 24th July 2017