Stacy enrolled her twin boys in a local day camp for the upcoming summer. Upon registration, she placed a cash deposit with the camp to secure two spots for her two sons. Two months prior to the summer, and continuously thereafter, the camp management contacted Stacy informing her that her payment balance is due, and Stacy reassured them all along that her check is on the way. With less than a week before camp Stacy cancelled, explaining that she and her husband changed their minds and they would rather go to Israel for the summer. Upon cancellation, the camp management claimed that Stacy is responsible to pay in full for her two sons, since other applicants were turned down due to the lack of vacancies. Not to mention the expenses incurred in preparation before each individual camper’s arrival. Stacy responded that she does not think that the camp turned away applicants, and furthermore, a week or so is ample time to find alternate campers. She added that the camp is unprofessional and does not require applicants to sign on any sort of contract. As a result, she says she is not liable for any payment, and is claiming the return of her deposit.
How should the Bet Din rule, in favor of Stacy or the camp management, and why?
According to the ruling of the Shulhan Aruch, in instances in which an employer hires a worker only to fire him before he begins his job, the employer is required to pay the worker for subsequent damages. Hence, if the employee initially had other job opportunities which are no longer available, his employer is responsible to compensate him for his loss of wages. By law, in such instances a worker does not receive full payment of his wages. Since ultimately the worker did not toil or labor at his job, he is not entitled to full pay. Rather, the amount paid to him after deduction represents his actual loss after considering he was spared the toil and sweat of his labor.
Leading halachic authorities rule that an employer is not obligated to compensate his worker unless the worker can prove that in fact he had another job opportunity at the time he was hired. If a worker fails to prove so, a Bet Din will not exact payment from the employer. Likewise, if there is sufficient time for the fired worker to find another job, he is required to do so, and may not rely on his employer to pay his lost wages.
The above rulings are applicable in instances in which a parent cancels their child’s enrollment in a school or camp. Any party providing a service, whether it is a contractor or camp or the like, is entitled to compensation for damages caused because of cancellation. Nevertheless, as mentioned, the camp is required to prove that they indeed had other applicants that were turned away prior to the cancellation.
The above rulings are applicable regardless of whether a formal contract is signed between the employer and employee. Even in instances in which a formal contract is generally signed, one who verbally consents to hire a service is liable for damages sustained because of his cancellation.
Halachic authorities debate whether a cash deposit is viewed as a binding transaction, thereby preventing both the buyer and seller from reneging. While some authorities view a deposit as a down payment obligating the balance to be paid, others rule in leniency. The lenient view is that a deposit is not a binding transaction, but rather more like a registration fee. While legally once a deposit is delivered it is not refundable, it nevertheless only serves as indication of intent and does not obligate the balance to be paid upon cancellation. When the recipient of a deposit claims a loss because of the cancellation, they need not return the funds already in their possession. Furthermore, once a deposit is advanced, it is understood that the money is forfeited upon cancellation. Whether or not a deposit is refundable may depend on the industry and other variables beyond the scope of this article.
VERDICT The Burden of Proof
Our Bet Din instructed the camp management that they first need to prove that they turned away other applicants because of their commitment to Stacy’s twins, before we can collect payment for their claim. As mentioned in Torah law, although no formal contract was signed, Stacy is liable if she caused the camp a loss of income. Even if a loss was sustained by the camp, nevertheless, they are not entitled to collect in full. Legally, some consideration is given to the fact that the camp incurred less expense and experienced less toil in the absence of two campers. With the closing of this article, nearly a month has passed and the camp has been unable to prove they turned away other applicants. Nevertheless, Stacy is not entitled to a return of her deposit, for multiple reasons discussed in the Torah law section of this article.