Non Refundable Deposit is fine. Your agreement must explain that the payment is NON REFUNDABLE.
That's all. Rule of thumb is that your initial payment be "reasonable" which courts usually see it as anything up to 50% being reasonable depending on the amount of time before the event that the client cancelled. The court may not see 50% as "fair" if they cancelled a year out, and you decided to keep it all. However, if they cancelled 1 month prior, then the court may find that amount fair ...If you asked for 75% to 80% up front, no court is going to see that as "Reasonable"
Most people in the wedding business know you have to protect your time and resources. For vendors, damages from a cancellation can range from losses on food that spoils, to alteration costs on gowns, to lost opportunities for booking another wedding. It can be particularly difficult for many…
weddingindustrylaw.com
"Enter: The Non-Refundable Deposit
So, you, the wedding business professional, have learned to get at least some money up front. That way, should the bride cancel, there is less need to go through the time intensive and costly litigation process: proving your case, proving your damages, showing the court that you mitigated the damages, etc.
The non-refundable deposit(s) (retainer, installment, etc) is basically the vendor’s way of saying, “These are my damages if you cancel, and I am entitled to them without having to do anything else….punk.”
The law refers to the non-refundable deposit as a Liquidated Damages Clause (the “LDC”). As stated, the LDC must reflect a good faith effort to estimate the damages suffered from a breach, or should represent a value amount of the contract that you would be happy with if the bride bailed at a particular point in time prior to the wedding.
Courts typically require the amount to be reasonable and that the harm suffered (your damages if the bride cancels) be difficult to accurately quantify at the time of the breach. For wedding industry professionals, harm at the time of breach is difficult to assess mainly because (1) booking an equivalent wedding on the same date is almost always a difficult proposition and (2) expenses incurred vary depending on how close the breach occurs to the wedding.
To put it another way, the purpose is compensation, not punishment or trying to deter the bride from breaching. Where the purpose is punishment, an LDC becomes a penalty and is no longer enforceable. Often, courts find sums that are too large or unrelated to the loss suffered to be penalties, but the burden will be on the challenging party to prove the unreasonableness."