Ok, hypothetically, I sign a contrat to host an event. Hosting this event includes sleeping rooms for my attendees as well as some breakfast and lunch functions.
Soooo… 4 days before scheduled event, I cancel the event. The rooms I was contracted to use have been resold. Am I responsible for payment of my cancellation fee? Is it not undo enrichment for the people who resold the rooms? Does it make a difference that the contract says 100 % of estimated revenues are due if the event is cancelled less than one week out regardless of whether the rooms are resold or not?
The legal term is unjust enrichment. This is an equitable remedy to avoid an injustice. If that sounds vague, its becuase it is a vague.
Its not relevant here. Sounds likie there is a contract. The only question is whether you owe the cancellation charge. This is called a liquidated damages clause. If you want to get out of it, you have to convince the court its an unenforceable penalty clause. Liquidated damages clauses are useful in contracts where the parties’ damages are not easily calculated, and the measure of damages when the contract is signed is some reasonable estimate of what the parties actual damages are likely to be. The details of the legal conceps vary from state to state, so you should get a lawyer in your state to help you. If you want to do some of it yourself, go to a law library and look in the “digest” under the term “contracts” and look at the table of contents under contracts for discussion of cases on liquidated damages. You want the digest of state cases, not federal cases. The digest is a 20-40 volume set depending on the state.
From the few facts you provided, you have a decent chance of avoiding the fee. Decent enough to merit more research anyway. The reason being that 100% of the lost revenue probably is not a reasonable measure of the damages, which would be lost profits. Of course you don’t mention the effect of the meeting rooms and meals you contracted for. If the idea that the lost profits from these were ignored and that the revenue from the rooms is a rough estimate of the profit from the rooms and meals, then your case is weak.
A lot of hotels will charge you 1 night’s revenue as a penalty for a booking regardless of how many nights you agreed to stay. For a 1 night stay, this may be an unreasonable penalty, but as your contractual stay gets longer it gets more reasonable.
YOu would also want to check state statutes to see if there is specific authorization for such charges.
The fact that they resold the rooms is a red herring IMHO. It would be relevant to calculate their damages if there were no provision in the contract specifying the damages. And just because they resold the room would not necessariliy prevent them from collecting damages. They may have resold it at a less profitable rate, had to pay a commission to obtain the reservation, etc.
I would consider discussing the matter with the manager and offering to pay a more reasonable penalty in light of the fact that they were able to resell the rooms.
Not only was the legal theory discussion absolutely on target, but there’s even some practical advice at the end. And I agree–the best way to handle something like this is to talk with the person in charge at the hotel and come to some agreement you find acceptable.