Cancellation clause

The contract terms stating what is owed if either party cancels, usually on a sliding scale by date.

How it works in practice

A cancellation clause is a schedule of money. It usually sets out what portion of the total is owed if the event is cancelled at different points before the date. The logic is that the closer you get, the less chance the vendor has of reselling the date, so the more they keep.

Read it alongside the payment schedule. If you have paid 50% by 90 days out and the clause says 50% is owed at that point, cancelling costs nothing extra. If you have paid 25% and the clause says 50%, you owe the difference. The two schedules should line up; when they do not, ask why.

The clause should also cover cancellation by the vendor. Too many contracts only cover the client walking away. What happens if the venue double-books, closes for renovation or the performer falls ill? A refund plus a named replacement of equal standing is a reasonable ask.

Worked numbers

A typical sliding scale on a $24,000 hotel F&B contract (illustrative; every venue writes its own):

Notice the jump at 30 days. That is the date to put in the client’s calendar.

How to handle it

1. Negotiate the schedule before signing; it is far harder after the deposit has cleared.
2. Ask for a reschedule option that applies deposits to a new date within 12 months instead of forfeiting them.
3. Check how the clause interacts with force majeure and attrition; a guest count drop is not a cancellation.
4. Confirm whether amounts owed are calculated on the total before or after service charge and tax.
5. Require cancellation notice in writing and record the date it was sent.

List every vendor’s cancellation dates in the risk register so the client sees the real exposure at each stage.