Proof that Sydney is a ‘money-appreciating’ place

As the cost of living soars, one woman says the ‘sleazy’ town is full of hidden costs, including when she was recently bumped by $100.

Welcome to Sisters In Law, news.com.au’s weekly column solving all your legal problems. This week, our Resident Lawyers and Real-Life Sisters Alison and Jillian Barrett of Maurice Blackburn discuss whether restaurants can charge cancellation fees after booking.

Question:

I live in Sydney and love going out for lunch or dinner to try new restaurants. I’ve noticed that more and more restaurants are charging $50 to secure a reservation which will only be charged if you don’t show up or give 12 hours notice to cancel the reservation.

The problem is that with Covid still being rampant, it’s not always possible to know if you’re going to have to cancel until hours before.

Recently I booked a table for six people and at the last minute two people had to cancel as they caught 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 very lucrative place, but that looks dodgy even by Sydney standards! Is it even legal? – Rose, New South Wales

Answer:

This practice of restaurants charging a reservation fee to secure a reservation is becoming more common, especially since the pandemic.

The purpose of the non-refundable fee is to cover part of the restaurant’s loss if the reservation is canceled at the last minute or in the event of a no-show.

Without this fee, if a customer were to simply change their mind about going to the restaurant, they would have little incentive to give the restaurant sufficient notice of their cancellation, and the restaurant would lose money holding the table. waiting for guests. to arrive.

In some situations, a cancellation fee like this may be legally charged by a venue.

When you make a reservation, you are entering into a contract with the venue, even if it is not in writing or booked online. A telephone reservation is a verbal contract.

As such, each contract includes terms and conditions which, according to Australian consumer law, must be fair.

As in many areas of law, there is a lot of gray and what is “right” depends on the specific situation.

Different places have different types of cancellation policies, and some have none at all, so you should read the terms and conditions carefully before making a reservation and note the relevant cancellation deadlines.

If the restaurant does not inform you of its cancellation policy or does not make it clear to you (either in writing or, if you called to make the reservation, then by telephone), the contract will probably be considered unfair and non-binding, hence you would be entitled to a full refund.

The other aspect of these booking fees that could make them illegal is the amount charged upon cancellation.

The non-refundable amount should only reflect the restaurant’s reasonable costs and should not be excessive.

Anything other than this may be considered an unfair contract term or penalty, which would not be enforceable.

For example, recouping the cost price of a small amount of food ordered to prepare a meal may be considered reasonable under the law, whereas charging the price of the full menu of a three-course meal for each guest would likely be unfair as it would likely exceed the cost of the meal.

Another factor to consider is the time allowed by the restaurant to cancel the reservation without penalty.

Since restaurants need to pre-order supplies and prepare for dinner service in advance, 12 noon, as mentioned in your question, may be a reasonable time to enforce a no-refund policy.

That said, if you had booked the whole restaurant for an event, a longer period stipulated by the restaurant might be considered reasonable, as would a higher cancellation fee.

Another factor taken into account to determine if the cancellation policy is reasonable is the ability of the restaurant to minimize its losses, for example by rebooking other customers.

As for what to do if you find yourself in this situation again, obviously this type of dispute is always best resolved by contacting the restaurant directly.

Assuming you have been informed of their policy, upon cancellation you may be able to negotiate something that works for both of you, especially if they want to keep you as a customer.

In this regard, you can specifically request that they provide you with a credit for canceling or rebooking using the rebooking fee for another date. You might even be able to offer to buy extra take-out food for guests who weren’t able to attend.

It is best that all verbal communications be followed up in writing and that you keep records.

If you are unhappy with the restaurant’s response, you can threaten and then make the problem worse by filing a complaint with NSW Fair Trading and the Australian Competition and Consumer Commission (ACCC).

They will assess your complaint and decide if they can help you find a solution with the restaurant.

If you cannot, your rights under Australian Consumer Law described above may apply if you take the matter to NSW Civil and Administrative Court.

If, at the time of booking, you were asked for your credit card details, but were not told that your card would be charged if you cancel, this may be considered an unauthorized transaction.

In this case, you should contact your credit card provider and request a “chargeback” for “services not rendered”. The supplier will investigate and manage the dispute for you.

Ultimately, remember that consumers have incredible power to influence, including choosing whether or not to dine at restaurants that have this type of cancellation policy.

This legal information is general in nature and should not be considered or relied upon as specific legal advice. Persons requiring specific legal advice should consult a lawyer.

If you have a legal question you would like Alison and Jillian answered, please email stories@news.com.au

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