With the usual peak wedding season drawing to a close, the Competition and Markets Authority (“CMA”) has recently published its guidance on cancellations and refunds due to COVID-19 by wedding companies.
We discussed the CMA’s general guidance on COVID-19 related cancellations and refunds by consumer-facing businesses in a previous article. In this article, we explore the key points of interest for businesses from the latest wedding-specific guidance from the CMA, which adds to their general guidance. The CMA has also recently published an open letter to wedding providers and its agreement with Bijou Weddings Group.
Agreement with Bijou Weddings Group
The CMA has published details of its agreement with Bijou, under which (in the context of the threat of court proceedings) Bijou has agreed to revisit previous refund decisions and offer affected consumers who did not want to reschedule their weddings partial refunds that reflect the services they received prior to cancellation. Bijou is required to clearly communicate this revised refund position to every affected consumer who has not re-scheduled their wedding.
The agreement also confirms the generally accepted position that where a consumer has already received, or will receive, a refund through their insurance, the consumer cannot double-recover and Bijou is not therefore obliged to provide refunds to such consumers.
Open letter to wedding providers
The CMA has written to a number of wedding providers directly and published an open letter to the weddings sector outlining its views on the consumer law position regarding cancellations and refunds.
The three principal areas of concern highlighted by the CMA are:
- wedding businesses refusing appropriate refunds where lockdown laws prevent weddings from occurring;
- uncertainty about weddings that are affected by legal restrictions and government guidance as lockdown laws ease; and
- wedding businesses seeking to rely on allegedly unfair contract terms.
We explore each of these issues in greater detail below in the context of the CMA’s latest guidance. However, in summary, where lockdown laws prevent weddings going ahead as agreed, or mean that the services which can be provided are radically different from those originally agreed, the CMA considers that consumers should be offered a full refund. The CMA nevertheless identifies limited circumstances where they say that businesses can make small deductions from refunds, such as where the consumer has already received bespoke items or the business has already incurred costs directly connected to the wedding. Finally, the CMA raises concerns with some clauses seeking to limit consumer rights, which they say may be unfair under the Consumer Rights Act 2015 and, therefore, unenforceable.
As always, the position is not as clear as the CMA makes out and, in the context of all three areas of concern expressed by the CMA, many of the general circumstances that we have previously explored and where it may be appropriate for consumer-facing businesses to withhold full refunds still hold true in this sector.
In the wedding sector specifically, businesses can withhold full refunds where they have:
- already provided some services, goods or value to the consumer (e.g. bespoke goods that could be reused at a rearranged wedding); and/or
- actually incurred some costs specifically attributable to the particular consumer contract which have now gone to waste (e.g. buying perishable flowers or food and overhead expenses specifically related to the cancelled wedding, such as staff time spent planning the wedding).
Whilst the CMA claims that businesses could spread the above costs over future contracts, and therefore businesses should bear an equal proportion of such costs with the consumer, this will obviously not necessarily be the case. Many businesses will be irreversibly affected by COVID-19 and once they are able to accept future contracts, their approach and business may be starkly different, preventing them from passing historic costs to new consumers.
Where weddings can legally go ahead but there is uncertainty caused by lockdown laws and government guidance
The CMA accepts that this is a grey area, but unsurprisingly adopts a very consumer friendly position, which pushes the boundaries of established law. There will be instances where any wedding that is legally able to take place is so different to that which was originally envisaged, such that the contract may be treated as being frustrated, and therefore as having come to an end. In these circumstances, the position on refunds as described above is relevant. For example, if originally a wedding reception was booked for 150 guests, arguably the current legal limit of 30 people (soon to be 15 people) significantly changes things for both parties. However, in reality, the situation may be more nuanced. Even the CMA accepts that where a wedding can legally take place in the form substantially agreed, but with some differences (for example, social distancing required), then it would be unlikely that the contract would be frustrated and the show will go on.
Unfair contract terms in wedding contracts
The final area of focus for the CMA is unfair terms, and in particular those purporting to enable businesses to provide something substantially different to what was originally agreed (for example, a smaller wedding at a different venue), and clauses effectively prohibiting refunds which might otherwise be due. The CMA has provided some general guidance on when it thinks terms will be unfair, but this is clearly an area where one size does not fit all. If consumers are aware of their rights and are not inappropriately pressured, businesses and consumers are free to agree alternative arrangements – and even the CMA accepts that.
For assistance on this or any other consumer law issue (including if you are concerned that the CMA may target your weddings business), please do not hesitate to contact one of our specialists.