I came home from work the other day, and Judge Judy was on TV. Normally, I don’t watch any of these TV judges shows, but as I was flipping through the channels I heard the announcer advise to stay tuned for the next case, a business contract dispute, or something along those lines. My attention was caught, and I settled in to see what the next case would be.
In a nutshell, a lady who provided makeup services was suing someone who had contracted with her. The plaintiff had been contracted by the defendant to provide makeup services for the defendant and other ladies on the day of the defendant’s wedding for something like $800 or $900 dollars. There was a written contract that the two parties signed about a year ahead of the wedding date. The defendant’s plan changed, and the wedding date was moved to an earlier date where the plaintiff was already booked and could not provide the makeup services to defendant. The defendant failed to pay the plaintiff for the full fee for the services – which were never used – and plaintiff sued the defendant for payment.
As the case unfolded before Judge Judy, we learned that the contract the parties signed did not contain terms as to what would happen if there was a cancellation, and it did not describe a deposit or the fee as nonrefundable. The plaintiff showed that she had invoiced the defendant for the services, and that the invoice declared that the fees were nonrefundable. Despite efforts by Judge Judy to explain that an invoice is not a contract (it is not signed by both parties), the plaintiff seemed rather insistent that because the invoice stated it was nonrefundable, then it was nonrefundable. While it may be permissible to have nonrefundable payments in a contract, or to make the defendant responsible for payment in the event the plaintiff turned away other work for that day or could not find replacement work if the event of a late cancellation, the contract apparently did not speak to those situations from what we were told. Long story short, the plaintiff’s case was dismissed, as there was no contract that required payment in the event of a cancellation of the services.
So, what’s the lesson here for business folks? It’s simple: you need to make sure that all material terms of a contract are actually in the contract signed by both parties. You don’t get to enforce terms that are not part of the contract just because you want to, or find it convenient. As you put in place a contract for the sale of special goods or for services, be sure that review it carefully so as to evaluate whether the contract is complete, covers all material terms and reasonable possibilities, etc. And for consumers: be sure to understand the terms of a contract before you sign it, and make sure that you are satisfied with its terms, and that the contract addresses what happens in the event that you need to cancel, reschedule, or modify the goods or services.
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Photo credit: Sven Scheuermeier, via Unsplash