Max Lowry : Hi, welcome to Just Answer. I will help you with your question.
Max Lowry : A penalty clause is a clause that applies in the event of a breach of contract, and which demands a sum of money that is not a genuine pre-estimate of loss that's likely to be sustained.
Max Lowry : Assuming, for the moment, that they're in the right and that you're cancellation is invalid, you'd be in breach, and they would be entitled to their lost profit.
Max Lowry : If the sum they're asking for represents lost profit, or a genuine pre-estimate of that amount, then it's enforceable.
Max Lowry : And not a penalty clause.
Customer: in these circumstances, I view the money as sitting on the books unallocated, they have not been put to any cost as it was dependent on the part 2 being passed first. I cannot see how they've experienced any loss.
Max Lowry : Well, they're loss would be not proceeding with part 2 and the profit they would have got from that, if you were obliged to proceed with part 2.
Customer: I requested the amount to be transferred to another bash at the Class 2 but they've refused that also.
Max Lowry : So assuming there was no obligation to proceed, and it was dependant upon passing class 2 first, then yes, it could very well be a penalty clause.
Max Lowry : ...
Max Lowry : What they need to show is that the courses you've booked for Class 2 would have been £720 profit to them - and it must be that you were not entitled to cancel.
Customer: my initial payment for class 1 and 2 together was £1900. Because of the failures further fees were paid to them for resits and further lessons and my total has now hit £4000. We cant afford to continue. Instructors regularly sat texting on their phones, didn't ensure continuity of lessons when changing instructors so not all aspects of the tests were ever covered hence the request to move schools.
Max Lowry : Right.
Max Lowry : So, assume you have no right to cancel.
Max Lowry : Then, their loss would be the profit they would have made on the class 1 and 2 courses, which you had agreed to take. Also, the additional class 2 lessons have to be taken into account - as you booked them.
Customer: That's what I thought, I felt the £720 fee was excessive and that I had good grounds for cancelling the part 1 with them. Will issue in small claims and see how it goes. Thank you for your assitance.
Max Lowry : Does this answer your question?
Customer: yes thank you.
Max Lowry : Thank you. If you need further information, either now or later, just let me know and I'll gladly help out. Please do remember to rate my answer as highly as you can for me. Thank you.