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Non-refundable $100 deposit

My 17-year-old granddaughter (Ella) encountered an unfair experience with Sarah Jade Hair, Bondi Junction. Ella lives on the far South Coast of NSW and was enticed by this classy Bondi hairdresser to make a booking via text messaging last mid-March for hair extensions. Ella had to pay a $100 non-refundable (as requested) deposit on 27 March 2021 for a booking at the end of June. After about two weeks, Ella realised that she would not be able to travel to Sydney so cancelled the booking on 20 April, allowing for more than two months notice. The Sarah Jade Hair person, Claudia, refused to refund the deposit even though there is more than ample time for the Salon to fill the gap with other clients. Is this fair trading on the part of this business, Sarah Jade Hair, Bondi? I think it is extraordinarily unfair to treat a vulnerable country teenager so badly. What do others think?

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Hi @mykeylane, welcome to the community and your post about conditions attached to a deposit for a service.

Yes, as they indicated that the deposit was non-refundable but your daughter chose to continue with the acquisition of their services. It appears they were clear upfront about it, rather than hiding it in some small print somewhere.

This is irrelevant unless they specifically said that if they could fill a cancelled appointment, they would then refund the non-refundable deposit. It appears this wasn’t a condition attached to the non-refundable deposit.

Would I have booked and paid a non-refundable deposit knowing there was a chance I couldn’t make the appointment and therefore lose the deposit…NO, especially if there was any risk I couldn’t fulfil the appointment.

Your daughter appears to have accepted the risk and it didn’t pay off. Hopefully your daughter learns from the experience about what non-refundable deposits mean and what may happen if she had to cancel the appointment.

Did she ask if she could reschedule rather than outright cancel? They may have been willing to transfer the deposit to another appointment rather than losing it outright.

Why is she vulnerable? If it is she is less likely to understand the risks or terms of the deposit…or couldn’t afford the cost to get to or complete the appointment, this isn’t the fault of the business. If she didn’t understand or was concerned with the risk, she had the choice not to proceed with making a booking with the risk of losing a deposit.

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It reads more like naive than vulnerable. I can imagine in small country towns non-refundable deposits could be foreign concepts and not understood by young people. Perhaps vulnerable in the context of ‘unworldly’ or inexperienced in the ways of business?

Sometimes young people are oblivious to such things rather than simply not understanding them, but as you wrote none of that is on the business.

Yet a non-refundable deposit for a hair appointment seems a bit over the top, especially without a cancellation window even if only allowing for a reschedule. How would that have gone in a lockdown if the hair dresser was unable to operate? One sided? Not enough information to know…

Well asked. Those who do not interact with businesses regularly or are new to doing so often do not consider alternatives that might be viable.

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Non refundable deposits protect a business from sudden cancellation and compensate for time and effort and money costs incurred.
Your granddaughter cancelled almost 3 months ahead, I wonder what time, effort, costs has the hairdresser incurred?
I would insist on a refund, especially that the cancellation was made so far ahead of time and for a good reason:
not being able to make the trip in June.
Persistence often pays :slightly_smiling_face:

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From the Sarah Jade website… bold added

Deposit Policy

Sarah Jade Hair requires a $100 non-refundable deposit to be processed upon booking, in order to secure your appointment. This deposit will be used as a bond. At the completion of your service, your deposit may be used as a credit towards your total bill on the day. Alternatively, at the end of the service you may choose to pay the total amount in full, and re-use this deposit to secure your next appointment.

We strongly suggest booking in advance in order to secure your preferred stylist, date and time. We are a very busy salon and this is the only way to ensure your preferred time is locked in.

Sarah Jade Hair requires 48 hours’ notice for any cancellation/rescheduling of appointment. Bookings are scheduled carefully to ensure enough time and space is allowed for your appointment to be carried out as effectively as possible. Any cancellations/rescheduling of appointments made within 48 hours of their scheduled time will see the deposit forfeited. If you cancel an appointment outside of 48 hours without rescheduling, the deposit will be kept on your account with us for future bookings, for up to 3 months.

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Looks like rescheduling is possible…I would be asking to reschedule rather than losing the $100 outright, assuming that your daughter wishes to still proceed with the appointment/planned services.

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If it doesn’t suit your granddaughter to reschedule @mykeylane
see if you can find out who the owner/manager of the hair salon is and get in touch with them. Often the manager is more disposed to show good-will towards customers, especially taking into consideration that Ella is very young and lives far away and has given more than ample notice of cancellation, and for good reason.
It would be difficult on their part to show any inconveniences.
Wonder if they have given her anything in writing.

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Where a business clearly discloses conditions that some might call unfair but which could still be permissible … it is nevertheless open to the business not to enforce those conditions, in the interests of creating or retaining goodwill.

So it is always worthwhile pushing it with the business a bit more to see whether they can be flexible.

General comment: Travel can become banned by the government at short notice. In the current pandemic, it is even more a good idea to consider whether a deposit, non-refundable or otherwise but particularly non-refundable, is wise.

From a non-legal perspective, a 17-year-old may be less able to afford the loss of the deposit ($100) than someone who has been in the workforce for a bazillion years. So financially vulnerable?

From a legal perspective, she is not an adult and that might impact on her legal capacity to enter into a contract. However clearly for $100 a legal avenue is not going to fly.

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Oh

I will tell all my friends about that business, for keeping money for no service what so ever… the law might be on their side ( I am not so sure about that though??) but if they are sooo very busy as they claim, that spot would be filled in no time… where is compassion or understanding in this???

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The law is on usually on their side as they disclosed the terms before making the contract, and terms were not illegal in nature just harsh for those who broke the contract. A contract does not need to be in writing to be a valid one, we as a society are just now more used to written rather than verbal contracts. As the contract was taken out by a Minor and might be likely considered as being for their benefit in NSW the following most probably applies (from https://legislation.nsw.gov.au/view/whole/html/inforce/current/act-1970-060#sec.16)

"19 Beneficial civil act

Where a minor participates in a civil act and his or her participation is for his or her benefit at the time of his or her participation, the civil act is presumptively binding on the minor."

Most States and Territories accept a Contract is binding when the Contract/“Civil act” is for the Minor’s “necessities” and the following from https://www.dundaslawyers.com.au/contracting-with-minors-is-it-even-possible/#_ftnref9 outlines some of what are seen as “necessities”
"

Contract for necessities

A contract for the sale and delivery of goods and services that are deemed necessities of life will bind the Minor in all Australian jurisdictions except New South Wales, [9] confirming yet again, that New South Wales is different!

Necessities are defined as goods or services[10] necessary for a Minor’s existing way of life, such as:

  • accommodation;
  • food;
  • clothing;
  • medicine;
  • education; and
  • instruction, (including music lessons and sports couching).[11]"

Informing friends and acquaintances is probably the most effective way to let others know of the business and this is probably the only way you may have an effect on their trade. It may also serve as a future warning reminder of why to try and avoid non refundable deposits or ensure the transaction is fully completed as arranged/agreed.

You could advise the business as your Daughter was a Minor you are seeking to take action in Court to enforce her rights to protection from the Contract terms, this might make them change their mind about whether they refund or not, you don’t have to go to Court but the “threat” of action may be enough. Just be sure to put the complaint in writing and give a reasonable time for a response eg 7 or 14 days for the business to respond favourably, a phone call is useless, writing what action you “will” take is often a stronger message than a verbal request.

You may wish to quote the following part of the legislation (https://legislation.nsw.gov.au/view/whole/html/inforce/current/act-1970-060#sec.16) to help strengthen your demand

Minors (Property and Contracts) Act 1970

Part 3 Capacity of minors

16 Application

This Part applies in relation to a civil act in which a minor participates after the commencement of this Act.

17 Preliminary

Where a minor participates in a civil act, the civil act is not binding on the minor except as provided by this Act.

18 Age of understanding

This Part does not make presumptively binding on a minor a civil act in which the minor participates, or appears to participate, while lacking, by reason of youth, the understanding necessary for his or her participation in the civil act.

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The fact that the deposit was non refundable was made perfectly clear by the company. Hopefully your daughter has learned a valuable lesson. I think trying to use the "poor, little innocent from the country " routine might not help her. She needs to grow up and understand exactly what contracts mean and be more careful about what she signs up to.

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As they are still a Minor NSW Law often trumps the “need to grow up”, which growing up she is doing. Youth is a learning experience and still often needs protections that Adults don’t get and this is why legislation protects many of their decisions made in error.

In NSW the presumptive means it is taken as binding until challenged, then by my reading her obligation could be easily overturned, but that might be a higher cost to do so.

I understand what you are saying, however we are Adults with sometimes many years of experience to fall back on when we make decisions and still often fail to avoid the traps, they don’t have that experience but are gaining it so a softer approach is often needful.

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From: www.Lawpath.com.au

“When does a non-refundable deposit become an ‘unfair’ contract term?
Non-refundable deposits are allowed when a buyer is aware of the fee prior to signing the contract. The fee should also not be an ‘unfair’ contract term. The non-refundable deposit should be in proportion to the business’ costs and time and not penalise the buyer as being ‘unfair’. An unfair contract is a contract between two parties that significantly benefits one person over the other. It is not necessary for all of the terms in a contract to be unfair. One clause can still be ‘unfair’ under the Australian Consumer Law (‘ACL’). If the term is unfair, it is excluded from the contract and the contract operates as normal without the clause.”

I may be wrong but It seems to me to be an unfair contract when notice of a cancellation for a hairdressing appointment is given nearly 3 months ahead of the appointment, what are the costs and time incurred by the salon?
It seems to be a penalty which benefits the hairdresser?

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This would need to be tested either in NCAT or at the Magistrates. This would still incur a cost to the person seeking redress perhaps much more than the $100 lost in the deposit, but it also risks not winning and still having spent extra.

Costs the Hairdresser could easily argue for are the time involved in booking, time involved in cancelling, time spent in refilling the vacant slot (and already potentially lost custom). As it appears it may be a well renowned business this may be a high enough cost to easily be over $100 even if we don’t think it is.

They, the affected, could complain to the ACCC over the matter but chances are much more in favour that ACCC will not act, but at least to complain to the ACCC is free.

I think the easier argument to make is that it was a Minor and thus the contract may not be binding, particularly as NSW does not affirm a contract is binding when a Minor but instead only makes a presumptive call.

In all of this getting some competent Legal Advice would be a great starting point and there are plenty of Community Legal services that will provide free and good advice.

A list of some

NSW in particular

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The challenge will be proving the business knew when entering the sale contract, that the purchaser was a minor. I suspect that the purchaser didn’t do it in person (as they live some distance away) and was done possibly over the phone. The deposit could have been paid by credit card/eft. A business would reasonably assume that the person was mature to be able to book an appointment and make payment using their own means. I suspect a court would need to be satisfied the business knew they were dealing with a minor and the business was provided evidence it was the case.

You might say they should have asked…possibly but I don’t know of any retailers that do unless there is a legal age limit to the purchase (alcohol, tobacco etc). One would also need to argue the business is special and should have asked the age of the buyer, unlike other businesses.

I am not sure success using this avenue is likely.

If someone paid the deposit on behalf of the 17 year old (say as a gift or because the 17 year old couldn’t make a payment, the sale contract will be with the other person.

As the business allows rescheduling of an appointment using a paid deposit, this would seem very reasonable and fair. Similar transfer is used by many other industries such as hospitality, tourism, building etc.

If one decided to cancel without taking up this opportunity to reschedule, it isn’t the businesses failure or created unfairness.

In such case the 3 months is irrelevant as the customer had opportunity to transfer it to another appointment (could be earlier or later) at a time that suits the customer.

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I agree that those type of industries might need longer times to arrange for travel, hospitality etc (and yet I was refunded my deposit for a tour to Hong Kong with very short notice; it shows good-will not to be inflexible, and pays in keeping customers).
This is a simple hairdresser, no matter how posh they present themselves: $100.00 to take a booking and to cancel the same?

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I think rescheduling shouldn’t be really part of this, the OP hasn’t even mentioned it, it would be very unfair indeed not to allow it. To me is the inflexibility of a hairdresser toward a customer who cancels an appointment which could not have had any inconvenience for the business that is showing unfairness.

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You are correct and perhaps I worded my response too harshly. However, I was concerned about the mother’s emphasis on her daughter’s innocent country girl persona as an excuse for what happened. That does not help the girl to face the reality that she entered into a contract with a firm where it was clearly stated that the $100 would not be refunded. For myself, if I saw a condition like that on a hairdresser’s contract I would immediately go elsewhere. I think it was a ridiculous and excessive amount to refuse to refund with no minimum cut off date. However, from the company’s perspective, they did clearly spell this condition out so the girl has no real case for a refund.

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Time to inhale, hold breaths, and hope @mykeylane responds back informing us how it went.

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