How do I protect my deposits from last-minute event cancellations?

Here are key clauses included in many event contracts:

• Cancellation policy: Define what counts as a cancellation and outline penalties based on timing. For example, if a client cancels within 30 days, they lose their deposit or owe part of the fee. This adds structure and discourages sudden cancellations.
• Deposit clause: State how much the deposit is, what it covers, and when (if ever) it's refundable. If you plan to keep deposits for late cancellations, make sure the amount is reasonable and reflects your actual loss — courts may not enforce a deposit or fee that looks excessive or unrelated to your costs. Many businesses keep the deposit for late cancellations but may offer partial refunds for early notice.
• Force majeure clause: Cover unforeseen events — like natural disasters or emergencies — that cancel the event without penalty for either side.

Clear terms set fair expectations and protect your business from losing money or valuable booking dates.

What to consider in your specific situation

While these guidelines work broadly, your best approach may depend on several factors, such as:

• The type and size of the event or service.
• The wording and timing of your deposit terms.
• Applicable state or local contract laws.
• The client's reason for cancellation.
• Prior agreements or changes made in writing.

Each business setup is unique. You can use Rocket Copilot to get legal information about event and deposit clauses, or connect with a Legal Pro to learn more about your options.