Retainer vs Deposit - Which Benefits Both Parties?
Updated: Jun 20, 2020
Today we find ourselves incorporating concepts and strategies in business that we never thought we would consider. Let’s face it, we were comfortable and using common verbiage in our contracts. As an event planner in the corporate and private industry, I have found that most contracts have the same content and a binding agreement between both parties. The length of the agreement, what services will be rendered, how and when payments will be made for these services, were standard. Common legalese in contracts often included words such as indemnification, release of liability, harassment, cancellations, and our new favorite, Force Majeur.
Force Majeur: an event (as war, labor strike, or extreme weather) or effect that cannot be reasonably anticipated or controlled : fortuitous event — compare act of god , inevitable accident.
In our new normal, the verbiage in a contractual agreement must incorporate new words and guidelines. Expect to see COVID19, coronaviruses, terrorists, and retainer, not deposit, used in contracts. The recent pandemic has required all parties write contracts that protect both the client and the service provider.
This distinction between a RETAINER and a DEPOSIT is very important. The two are frequently confused, and often the terms are used interchangeably, but are NOT the same.
By definition, a retainer fee is an amount of money paid upfront to secure the services of a consultant, freelancer, lawyer, or other professional. It’s most commonly paid to parties that have been engaged by the payer to perform a specific action on their behalf, paid in advance to hold goods or services. The retainer fee is deemed earned the moment it is received.
A deposit is a payment towards goods or services usually returned once the goods or services have been acquired.
The wedding industry has always used deposits, it has always been problematic, and only made worse with this pandemic. With deposits, we have observed a spike in broken contracts. Clients and vendors are backing out of agreements. We have witnessed unhappy couples not receiving deposits, often because vendors are financially not able to return deposits.
I would like to see the wedding industry start using retainers, rather than deposits in future contracts. Retainers would be non-refundable, and given as payment in advance, and would alleviate the overall misnomer of refunding a deposit. This notion is not to discredit anyone’s recent financial loss, or to mask the financial disaster we have all been through, but to encourage us to welcome change. A change, to solidify the contractual agreement as a financially pledged commitment, and one beneficial to both parties.
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