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Saddle River Day School, Inc. v. Conway

A-1474-03T2 (N.J. Super. App. Div. 2004) (Unpublished)

SCHOOLS; CONTRACTS; DAMAGES—It is acceptable for a school’s tuition agreement to require a parent to pay full tuition when removing a child from the school after a stated date, but if the slot is filled, the parent may be entitled to a partial refund.

Parents executed a day school enrollment agreement and paid a non-refundable deposit to reserve a place for their daughter. The agreement didn’t allow for refunds if the child was removed after a specified date. After that date, tuition was payable for the entire school year. Despite this, the parents decided to send their child to a boarding school and notified the day school of her withdrawal a month and a half after the specified date had passed. After the parents refused to pay the tuition, the school sued and a lower court granted the school’s motion for summary judgment.

On appeal, the parents argued that they were not liable for the full year’s tuition on the theory that payment of at least one-half of the tuition by the specified date was a condition precedent to any obligation on the part of the school to reserve a place for their child. The parents contended that because that half payment had not been made, the school should not have held a spot for their daughter and, therefore, they were not liable for an entire year’s tuition. The Appellate Division disagreed, pointing out that the agreement stated: “[the] enrollment agreement and a non-refundable deposit ... are a reservation of place for the school year.” The agreement did not require that tuition be paid in order to reserve a spot. The Court concluded that the required timetable to pay the school year’s tuition did nullify the introductory portion of the agreement.

In addition, the parents argued that the enrollment agreement was a contract of adhesion. The Court held that although the contract was preprinted, the record indicated that the parents could have negotiated the date by which they could withdraw their daughter without penalty. It also held that even if the agreement were a contract of adhesion, there was no basis for invalidating it. The parents were free to send their child to any other school with a different enrollment policy or the parents could have avoided liability by simply informing the school of their change in plans earlier.

The parents also argued that the school had a duty to mitigate damages. The Court disagreed, feeling it was a difficult task to determine how many students will attend in any given year and to create a corresponding budget. Courts have repeatedly held that under a contract in which an educational institution agrees to provide instruction for a specified period, and where a parent agrees to pay a definite sum for tuition, and where the contract expressly provides that no refund will be made, the entire tuition is payable despite the fact that a student has withdrawn.

Finally, the parents contended that enforcement of the tuition payment would result in the school’s unjust enrichment. Although the school did not have a duty to mitigate damages, the Court held that the damages should have been adjusted according to whether or not a student had filled the spot that had been vacated. Therefore, the Appellate Division affirmed the lower court’s grant of summary judgment, but since the record did not indicate whether the child’s position had been filled, the court remanded the case to determine whether or not the parents would be entitled to a credit for the amount of tuition paid by parents of a potential replacement child.

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