The outbreak of coronavirus (COVID-19) brought about sudden changes to society making many holiday contracts impossible to perform (also called ‘frustrated’). This applies where Government or other action has intervened to make performance of the contract impossible. It does not apply where such action or advice imposes restrictions, such as a need to quarantine after travel, but still permits the contract to take place.
For guidance on local lockdowns and holidays see GOV.UK – Guidance on holidays in areas with local coronavirus (COVID-19) restrictions.
In either event, the best advice is to speak to the business. There have been many examples of customers and businesses working constructively together to avoid the need to cancel completely, either by agreeing a revised booking date or by securing some other arrangement.
These arrangements are voluntary but prove the majority of customers are keen to have a holiday to look forward to, which in turn helps those businesses that are struggling due to the financial impact of the current situation.
If consumers are unable to postpone to an alternative date, their legal right to a refund on a “frustrated” contract will depend on the type of contract agreed. If the accommodation is part of a package, specific regulations imply a contractual term that will enable them to receive a refund.
If the contract is not a package, the business’s booking terms and conditions apply where they have included a specific term to cover such events, sometimes referred to as a ‘force majeure’ clause. This will bind consumers if it is a “fair” contract term.
If the trader’s terms and conditions do not cover the situation, the Law Reform (Frustrated Contracts) Act 1943 applies, which contains a statutory entitlement to a refund for consumers less deduction of reasonable costs.
Ultimately claims would have to be enforced through the county court. As referred to earlier, hopefully the majority of cases will be resolved without needing to get to that stage.
Practical steps to resolving a holiday cancellation issue:
- Is it a package? If it is, consumers can request a full refund on all monies paid.
- If it isn’t, check any terms and conditions relating to your booking. Do they state that all monies will be refunded in situations where cancellation occurs due to ‘force majeure’ (i.e. major unforeseen events outside of either party’s control – and where contracts have been entered into after the pandemic was recognised in the UK, disruption due to its effects may take on a more “foreseeable” aspect)? If so, contact the business to request a refund and follow their processes in the first instance.
- If you have travel insurance, check the small print to see if your booking was covered; and if so, contact your insurer to register a claim. If they deny your claim you may need to speak to the Financial Ombudsman Service. Most travel insurance contracts entered into now will exclude some claims for COVID-19.
- If your accommodation booking was over £100 and you paid some or all of the amount by credit card, you may be able claim through your credit card company. Contact your credit card provider to register a claim.
- Finally, as a last resort, where the accommodation provider continues to refuse a refund and you have no other means of getting your money back, you may consider issuing a claim via the county court, under the Law Reform (Frustrated Contracts) Act 1943. Note that using this legislation, the provider is permitted to withhold some monies for costs that they have incurred in dealing with your booking.
The Competition & Markets Authority (CMA) has also published:
- CMA to investigate concerns about cancellation policies.
- The coronavirus (COVID-19) pandemic, consumer contracts, cancellation and refunds.
- CMA update on enforcement action.
- COVID-19 cancellations: package holidays.
If you need further advice or information about cancelling a booking due to COVID-19, contact the Citizens Advice consumer helpline on 0808 223 1133.
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