The Myth of the Non-Refundable Deposit

This is why I never take a Deposit!

Has this ever happened to you?

"Hi, we were going to have you be Santa for our home party but we just decided to go to the Bahamas for Christmas instead. I know this is short notice but this is a once in a lifetime opportunity for the whole family and we just have to go! I know this is short notice but can we swing by and pick up a refund of our deposit in the next couple of days? Thank you and Merry Christmas!"

Now the first thing you might think is "My contract clearly states that the deposit is non refundable!" and your thoughts may run along the lines of "I held this date for them for months! Now a few days before the event, they want to cancel and get a refund?!? Fat Chance!"

Well my friends, the key word is "Deposit". And if you contract does not have wording such as "Monies paid as a RETAINER to hold the time and date retaining the services of the Independent Contractor shall not be refunded if the appearance is cancelled. Said RETAINER shall be applied to the total cost of the performance at the time of the event." By taking a retainer and holding the time and date for the event, you earned that money. By taking a Deposit against the total cost of the event, you have not earned anything until you do the work.

So what does that mean? No matter how many times in the contract you put in that the deposits paid are forfeit in the event of a cancellation, if it goes to small claims court, the judge is going to rule that the work detailed in the contract has not been done and that YOU therefore have to return the money. All of it. You don't so the work for any reason, you do not get paid. Period. There is no such thing as a Non-Refundable Deposit.

Here is the reason why. Your contract reads "Santa Inc. will provide 2 hours of entertainment performing as Santa for the family and guests present at the party on December 15th 2014 and all deposits collected will be applied to the total cost of the performance." What that means is when you arrive in court with your copy of the contract in hand and the Judge asks you "Did you perform as outlined in this contract?" Your answer will be "No, because they cancelled." The judge will the rule in favor of the person that cancelled the party as YOU did not do the work. You did not perform and therefore you did not earn the payment.

In short, a DEPOSIT pretty much means REFUND if you do not perform for any reason what so ever. Think about that for a minute or two.

A RETAINER is a different story all together. In your contract you should state that the "RETAINER is collected to hold your time and services for the date and time specified and that you will NOT accept any work or make any other reservations or accept any other clients for said date and time. For this reason, in the event that the client cancels the contract for any reason, all monies paid shall be retained by Santa Inc. in order to offset its loss of business.” This will then stand up in court as you will have earned the money by not taking any other business while holding that time and date for the client.

Retainer you get to keep, Deposit you have to refund.

Now over the last 32 years in the course of doing business, I have given partial and even full refunds. Not because I have to but because it was "Good Business" to do so. When you have a high profile client with lots of friends you would like to perform for in their homes and businesses, it is simply good business to accommodate a client that has a problem that keeps them from holding up their end of the contract.

IF I can afford to do so, IF the client is important to my business, IF they have been honest with me and it truly is out of their control, I will issue the refund cheerfully and promptly. As a very good and trusted friend, Mentor and fellow magician told me, it is all part of the game.