The Client calls, you are asked to plan an event, you meet with the client, they are interested in your ideas and in fact, excited to have the event. The Planner prepares the contract and has to immediately start working on the event since the Client is filled with expectations, although the Client has yet to issue a signature and submit the invoice for payment. Continuing to work and move ahead, the Planner starts to get into the true depth of the planning in conjunction to the Client's guidance and verbal agreement. Then, out of no where, the Client cancels the event, due to an INSERT REASON HERE (budget, sponsorship, attendee) issue.
Without a signed and binding agreement, how do you justify the cost of the time spent on preparing the event without a formal cancellation clause? This is a very tricky situation. The first question you must ask is "How Do You View the Client?". Is this a Client that you have done business with in the past, plan to do business with in the future or is a prominent figure in your particular industry? Then "How Much Work Did You Truly Put Into the Planning?" and "Can You Utilize That Work For a Future Event?". Also, is it worth having a conversation with the Client to see if they will work with you on a cancellation fee without creating a conflict. Those are all tough business decisions to make.
What if don't feel as though the Client is worth the business? What kind of repercussions do you have? Do you really want to settle this matter in the court system? Do you have the documentation to even support your case?
The best resolution is to not even let the situation get to this point. But if it does, communication along with the understanding that no one enjoys talking about money is the first step. It is the nature of the business and the only road to a solution, especially if you want to be compensated for your services.