Are non-refundable deposits enforceable after unexpected business closure?

Question

I owned a birthday party rental place but had to unexpectedly close due to the economy. We had a non-refundable deposit policy clearly stated on our website, which customers had to acknowledge before paying by credit card. Our policy allowed bookings to be made 24 hours in advance, and the closure resulted in unfulfilled bookings. Despite our non-refundable clause, some customers are requesting refunds for services not received. Do we have any legal obligation to return these deposits?

James L. Arrasmith · Answer

This is a tough situation, especially when the closure was sudden and out of your control. While non-refundable deposits are generally enforceable in Louisiana if clearly disclosed and agreed to by the customer, they are usually tied to services actually being available. If customers paid for bookings that were never fulfilled because the business closed before their event, the “non-refundable” clause may not fully protect you under contract law. 
 
Courts often view deposits as compensation for holding a date or reserving resources, not for services that were never available at all. Since you were no longer able to provide the service, some customers may argue that keeping their deposit is unjust enrichment. Even if your terms were clear, the fairness of enforcing the policy during a full business shutdown could be questioned, especially if customers acted in good faith. 
 
It might be in your best interest to offer partial refunds or alternative solutions, especially for customers who never received any benefit. Doing so could help prevent chargebacks, disputes, or even potential small claims actions. You put effort into building a business, and treating your customers fairly—even in closing—can protect your reputation and avoid legal trouble down the line.

Q: Are non-refundable deposits enforceable after unexpected business closure?