A penalty larger than the fee?

[mangeorge]

@isaiahrobinson

You might not realize it, but you’re asking about contract law. The type of penalty you’re asking about is contractual.

I’ve seen contracts where the recipient of a service pays a penalty on top of the normal fee for a breach of contract, which it sounds like your no-show would be. Lordsvale Finance Plc v Bank of Zambia [1996] for instance.

The recipients here (me, et al) pay nothing either way.
Anyway, is a no-show a breach even though the normal fee is paid? There’s an “ass in the seat” clause in the contract?
I’ve been to a lot of training in my 35 years with this company, and any cost for a no-show has always been equal to or less than the regular fee. Sometimes nothing at all if the contractor can fill the seat (as required) from a wait list.

[isaiahrobinson]

@mangeorge

The recipients here (me, et al) pay nothing either way.
Anyway, is a no-show a breach even though the normal fee is paid? There’s an “ass in the seat” clause in the contract?

It might be. If somewhere in the contract it says “[Party A] shall show up at on the specified day for training” or “The Company shall ensure its employees show up at 3pm…” then the employee not showing up is a breach of that term, whether they pay the fee or not. And in fact if no-showing is not a breach of the contract, it arguably makes it more likely that the penalty clause will be deemed OK, because then no-showing is not a breach of contract and the clause can’t be a penalty clause anyway.

The problem is you won’t be able to get an answer on this forum either way, because there’s too many variables. If no-showing would breach a term of the contract and the penalty clause is not a “genuine pre-estimate of loss”, it probably wouldn’t be allowed. Unless there’s a good “commercial reason” for it as there was in the Lordsvale case, which case it’ll be allowed. Unless the real commercial reason was deterring breach, in which case it wouldn’t be allowed.

Etc. It’s the kind of question that needs a lawyer if you really want an answer, because the answer might be completely different depending on a whole array of factors. If I had to guess (not in the capacity of giving legal advice), it sounds like the clause would be a penalty clause and wouldn’t be allowed, as you suspect. But equally there’s a host of reasons why it might be fine.

[kayaker]

Another “penalty larger than the fee” situation involves bounced checks. I had someone write a check to my business (back when I accepted checks) for $12.00. When the check bounced, I billed them for $12.00 plus our $35.00 fee for NSF checks. They paid it, though they were unhappy.