Welcome back to another episode of The Legal Paige Podcast. Today, I am sharing some insight into the words deposit and retainer. This has been a huge debate in the online world and for every small business owner who has contracts in place.
Things we talk about:
- If you should be using the term deposit or retainer or if you should be using the word reservation fee instead?
- My best suggestion for setting up your contracts correcting and what wording we use here at The Legal Paige.
- What happens if there is a cancellation, and what happens to the retainer?
- As well as additional language and legal lingo you need to add to your fee clause!
Here are a few quotes:
"The first person to book with you is essentially paying a deposit or a retainer or a reservation fee for that day. In order for you to cross off that date on your calendar and say no to other inquiries. Especially if it's a date that everybody wants, that is a really essential reason why you have that retainer in place to begin with. Because in the event that this client cancels on you, you've already said no to a ton of other clients, hopefully at that point. Those clients you said no to their date, have probably moved on to a different service provider and have booked that other service provider."
"I just suggest not using the word deposit. If you do want to use the word deposit, you just need to be very careful with the additional wording that comes after that, and then be very clear throughout your contract."
"So reasonableness is this grey-area term, that kind of depends on the facts and circumstances of each scenario. But a judge is generally looking for these few things: was it clear to the client that the retainer was non-refundable so it's right in the first paragraph at the very top that it is a nonrefundable retainer for X purpose., number two is why was it nonrefundable? Did you literally, word for word, spell this out in your contract? That's really important, and then a judge is going to decide, is it reasonable?"