Contracts are agreements between two private parties that create mutual legal obligations for both parties. Contracts may be in an oral form or a written form.
It is important to note that an oral contract is typically more challenging to enforce and should not be used, if possible. There are certain types of contracts that are required to be written in order to be valid, for example contracts involving a significant amount of money, such as over $500.
In order for a contract to be valid and enforceable, it must include the following:
- An offer;
- And acceptance of the offer presented;
- A promise to perform;
- Valuable consideration;
- A time when or an event at which the performance must be made;
- Terms and conditions for the performance; and
- Performance.
Contracts that fall under the Statute of Frauds will not be enforced unless they are in writing, including:
- Marriage contracts;
- Contracts that will not be performed within 1 year;
- Contracts for an interest in land;
- Contracts where one individual guarantees to pay the debts of another; and
- Contracts for the sale of goods over a certain amount.
Other requirements for valid contracts include:
- Complete and clear terms;
- Voluntary consent by both parties; and
- Legal subject matter.
Is a Hotel Reservation a Legal Contract?
Under contract law, hotel reservations are binding contracts that consist of mutual promises. The hotel agrees to provide the guest with an accommodation at the rate specified and the client agrees to pay for their reservation.
There are two different types of reservations that hotels typically offer to their guests. These include prepaid or guaranteed reservations and confirmed reservations.
With a prepaid or guaranteed reservation, the guest provides the hotel with a credit or debit card number in exchange for the hotel promising to have a room form them no matter what time they arrive for check in. with a confirmed reservation, the guest does not pay for the reservation in advance and, therefore, they do not have a guaranteed reservation.
The guest will only receive confirmation of their reservation from the hotel by:
Typically, the hotel will place a condition on the reservations, for example, the room will be held until 7:00 p.m.
What If a Hotel Does Not Honor My Reservation?
Whether or not a hotel is considered to have breached its contract when it does not honor a reservation will depend on the type of reservation that the guest obtained. If a hotel fails to honor a prepaid or guaranteed reservation, it has breached the contract and is required to do everything possible to find the guest another room.
Even if the alternate room is more expensive, the hotel will be responsible for that difference in price. The hotel would also be responsible for any related incidentals, such as travel or phone calls to notify other individuals about the change of plans.
If the guest has a confirmed reservation, the hotel is required to honor that reservation unless the guest fails to meet the conditions of the reservation, if there were any. If the guest meets those conditions and the hotel does not have a room for them, the hotel must do its best to find comparable accommodations.
What Is Considered a Breach of a Contract?
If either of the parties to a contract fail to fulfill the legal obligations under that contract, they have breached the contract. If one party, in this case, the hotel, breaches the reservation contract, the guest will likely suffer economic losses if they are not provided other accommodations.
A breach of contract claim is a cause of action that is brought in a civil court of law. A breach of contract claim may arise based on:
- Non-performance;
- Interference with the other party’s performance; or
- A party failing to perform according to the terms of the contract.
What Remedies Do I Have?
When an individual is seeking a remedy for a breach of contract, the non-breaching party, or the plaintiff, may sue for damages or for equitable relief. Compensatory damages are a type of monetary compensation.
In a contracts case, there are different categories of damages the plaintiff may seek, depending on the type and content of the contract, including:
- Expectation damages: These damages are those which put the individual in a position they would have been in had the contract been performed;
- Consequential damages: These damages are those losses that stem directly from the breach;
Incidental damages: These damages are those that are reasonably foreseeable as a result of the breach; and
- Liquidated damages: Certain types of contracts include a liquidated damages clause. In the event of a breach, it may be difficult to determine expectation damages, therefore liquidated damages represent the amount a non-breaching party can recover from a breach;
- It is important for a damages clause to be reasonable. If the amount is egregious, it may be considered to be a penalty and the court will not honor the liquidation cause.
Equitable remedies are provided in situations where monetary compensation is not sufficient to compensate the plaintiff for their loss. Equitable remedies that may be available include:
- Specific performance: Specific performance is an order by a court that requires a party to perform under the terms of the contract;
- Rescission: When recession occurs, the court cancels the contract and both parties are excused from performance under the contract; and
- Reformation: Reformation is a court action that changes the terms of a contract to represent the true intent of the parties involved.
It is important to note that a plaintiff may not seek both monetary damages and equitable relief. In the case of a breach of contract related to hotel reservations, because it was likely that the breach occurred related to the plaintiff’s travel, monetary compensation is likely to be the requested form of relief.
It would not be helpful for a plaintiff if they needed a hotel room in March and sued the hotel requesting a hotel room the next year. Instead, the plaintiff would likely request that the hotel compensate them for any necessary changes to their itinerary, such as having to stay at another, more expensive hotel, or other costs associated with changing their plans.
Does the Hotel Have Any Defenses?
In the broad body of contract laws, there are generally, 4 categories of defenses that may be used against a claim of a breach of contract, including:
Anticipatory repudiation arises when the breaching party notifies a non-breaching party to a contract that they will not be holding up their end of the agreement. Defense by waiver arises when the non-breaching party allows the breach to continue and, therefore, gives up their right to enforce the contract.
Tortious interference arises when an individual who is not a party to the contract intentionally interferes with the performance of the contract. The unclean hands doctrine is used when the breaching party claims the non-breach party also acted wrongfully.
Do I Need a Lawyer?
Contract laws can be very complex. If you think that your hotel breached its contract to honor your guaranteed reservation, it is important to consult with a contract lawyer. Your lawyer can review your reservation, advise you of the contract laws applicable to your case, and help you obtain compensation for your losses.
