# Cancellation of Contract due to Death in family of Client



## La Jolie Chef (Jun 22, 2018)

I am rewriting my contract.
(Hypothetically), in the event that there were a death,accident or act of God in the client's family who has booked the date, and given deposit for food and then at that juncture cancelled. Would they be responsible for whole agreed upon remaining balance due ? I would be of course sorry for their loss but the fact remains I held the date for them and now cannot recoup losses. Do you all have this clause in your Contracts ,,? How do you handle this ?
Thanks for response. Also, what is best form of protection as a small biz owner. I am now functioning as a "DBA". Should I incorporate and become an LLC. ? Any thoughts.?
Thank you!


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## Seoul Food (Sep 17, 2018)

I believe you would normally put into the contract something about your cancellation policy and the window of effect. For me it would not matter what the reason is, yes I am sorry if there is a death but this is a business and is no more legitimate as someone who just doesn't want to have the party and cancels last minute. You can be fair without giving away the farm. You have a business and life of your own and a fast way to ruin both is to always cater (pun intended) to the whims of your clients. As for the DBA, I believe you receive more protections as a LLC but I may be wrong, it's been a while. It could also depend on local codes about these things.


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## sgsvirgil (Mar 1, 2017)

First, a contract must spell out everything, including cancellation policies. Unfortunately, an unforeseeable event such as a death or an "act of god" that makes it impossible for fulfill the terms of the contract is a risk that both parties must take. Sure, you could add language to the contract that requires payment in the event the customer cancels after a specific date or within a certain time of the event. Generally speaking, however, it would probably cost you more in legal fees and time spent than the total of the unpaid balance. Having said that, you could simply add a provision that states in the event you have already paid for provisions and supplies out of pocket before the cancellation, and the cancellation happens after a specific date listed in the contract, the cancellation fee will be in the amount of those expenses. The goal here is to increase the chances of being reimbursed without the necessity of going to court.

Also, remember that if the amount is small enough, you can pursue a judgement in small claims court. Check with your local courts to see what that amount is and whether such a thing would qualify for small claims court. Some contract disputes, regardless of amount, can't be heard in small claims. But, that varies from place to place.

As for the DBA vs LLC, @Seoul Food is correct. Under a DBA, there is no distinction between you as the owner and the business. So, in other words, if your business gets sued for liability, your personal assets will have far less protection under a DBA than if your business was set up as an LLC.

Also, for tax filing, LLC's are rather simple and generally do not require any additional filings. LLC's allow "pass through" taxation which allows both profits and losses to be "passed through" to the individual income taxes of the respective members of the LLC without getting entangled with complex corporate tax regulations.

There are pros and cons for each. If you are at a point in your business development where you must choose how to form your business, you should talk with a licensed CPA or attorney.

Good luck.


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## La Jolie Chef (Jun 22, 2018)

Thank you so much ! Very helpful..


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## La Jolie Chef (Jun 22, 2018)

Seoul Food said:


> I believe you would normally put into the contract something about your cancellation policy and the window of effect. For me it would not matter what the reason is, yes I am sorry if there is a death but this is a business and is no more legitimate as someone who just doesn't want to have the party and cancels last minute. You can be fair without giving away the farm. You have a business and life of your own and a fast way to ruin both is to always cater (pun intended) to the whims of your clients. As for the DBA, I believe you receive more protections as a LLC but I may be wrong, it's been a while. It could also depend on local codes about these things.


Thank you do much.


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## halb (May 25, 2015)

This makes me wonder if there is insurance that the customer can buy through you that would cover them in the event of such catastrophe. I know it exists for things like summer rentals.


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## sgsvirgil (Mar 1, 2017)

halb said:


> This makes me wonder if there is insurance that the customer can buy through you that would cover them in the event of such catastrophe. I know it exists for things like summer rentals.


The best way to explain how this wouldn't work is this. I buy a car from you. You also write an insurance policy that indemnifies yourself in the event the car malfunctions and I purchase that policy from you. Who, then, gets the payout from the insurance? You or me?

There are laws that permit a person, business or corporation to "self insure." However, the criteria for self insurance are typically very strict and the cost of such self insurance would be otherwise well out of the reach of most small businesses.


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## halb (May 25, 2015)

Well, I did find this:

https://www.progressive.com/special-event-insurance/


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## sgsvirgil (Mar 1, 2017)

halb said:


> Well, I did find this:
> 
> https://www.progressive.com/special-event-insurance/


Sure. You can pretty much take out an insurance policy on anything. Point in fact, Lloyd's of London. But, the difference here is the insurance is offered by a third party, not the caterer or someone who is otherwise party to the contract between the caterer and customer.

The only way that a party of a contract can be "insured" in a contract by a person who is a party to the contract is if that contract contains an indemnity clause. Conceivably, the caterer in this situation could include an indemnity clause that states they will be made whole again by the customer in the event of a last minute cancellation, an act of god etc. The opposite is also possible. The customer could insist on an indemnification clause that requires the caterer to make the customer whole again in the event the caterer doesn't fulfill the terms of the contract.

In the real world, however, rarely will a party to a contract agree to an indemnity clause that places at stake their personal assets. Typically, the indemnification clause is backed by some form of insurance policy. That way, both parties to the contract are protected.


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## chefross (May 5, 2010)

In my experience death does not excuse a contract. Deposits are still lost. Venues are still canceled.


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## chefbillyb (Feb 8, 2009)

I would think if there was a hardship that my client was experiencing that was bad enough for them to cancel an event I would be understanding. If my business can't absorb the loss of one function among hundreds then something is wrong. I would rather be the business that showed my client compassion in their time of need. If you're in this business long enough you'll find out that being successful isn't always about how much money is in the Bank.....ChefBillyB


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## La Jolie Chef (Jun 22, 2018)

La Jolie Chef said:


> Thank you do much.


Thx s


chefbillyb said:


> I would think if there was a hardship that my client was experiencing that was bad enough for them to cancel an event I would be understanding. If my business can't absorb the loss of one function among hundreds then something is wrong. I would rather be the business that showed my client compassion in their time of need. If you're in this business long enough you'll find out that being successful isn't always about how much money is in the Bank.....ChefBillyB


Well said, my friend. Thank you.


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## chefross (May 5, 2010)

All fine and good if one has "hundreds of functions" but the fact remains business is a business for a reason. I'll compromise and say that they client loses the deposit.


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## chefbillyb (Feb 8, 2009)

chefross said:


> All fine and good if one has "hundreds of functions" but the fact remains business is a business for a reason. I'll compromise and say that they client loses the deposit.


You only have one chance to do the right thing when it comes to how you react to someones difficult situation. Compassion for someone else's troubled time may not be seen by a lot of people. I do guarantee that it will be proof to yourself of the character you present to your clients on a daily basics. If losing one catering is going to make or break your business then you shouldn't be in business. ChefBillyB


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## chefross (May 5, 2010)

Yeah right, so my father passes away 3 weeks before my wedding. We have to, out of religious circumstances, cancel, the band, call back 200 guests to cancel, move to a smaller room in the hall, change the food and the flowers to accommodate, yet not one of those company's we dealt with had ANY compassion. We lost a lot of deposit money......Yup compassion eh?


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## chefbillyb (Feb 8, 2009)

So, for a lousy few dollars you want to be like them. I would rather be the caterer that helped you and all the people who attended your function know I went above and beyond to help you succeed during your unforeseen, tragic, and sorrowful time.......
This may be a good time to review how you felt at your time of need and change it for your clients. I'm not trying to think I'm better than anyone else in my views on how someone should do this. I just know I didn't build my business by giving my clients less. I feel taking care of all my clients needs is my job. Their problem is my problem........ChefBillyB


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## chefross (May 5, 2010)

chefbillyb said:


> So, for a lousy few dollars you want to be like them. I would rather be the caterer that helped you and all the people who attended your function know I went above and beyond to help you succeed during your unforeseen, tragic, and sorrowful time.......
> This may be a good time to review how you felt at your time of need and change it for your clients. I'm not trying to think I'm better than anyone else in my views on how someone should do this. I just know I didn't build my business by giving my clients less. I feel taking care of all my clients needs is my job. Their problem is my problem........ChefBillyB


Chef, however much I appreciate your words, it seems as though the OP asked about this very same thing.
If the contract states that the client will be held responsible for bill regardless of circumstance, that's one thing. If a situation beyond the clients control happens, that's another thing. Whatever the owner puts in the contract, can either be agreed upon, or negotiated mutually. Once signed, it is a legal document.
Again, the loss of the deposit is the least of a clients problems when facing a life event.


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