South Dakota
South Dakota writes the rule into its code, and it covers every contract, services included. A penalty in a contract is void, but the parties may agree on a sum presumed to be the damage where the actual damage would be impracticable or extremely difficult to measure. The South Dakota Supreme Court reads that as 3 tests: the loss was very hard to estimate when the deal was made, the parties made a reasonable attempt to set compensation, and the amount bears a reasonable relation to the probable damage. The client who wants the money back has to prove the deposit is a penalty.
Does a non-refundable deposit hold up in South Dakota?
SDCL § 53-9-4 voids penalties, and § 53-9-5 allows an agreed sum only where the actual damage would be impracticable or extremely difficult to measure. In Safari, Inc. v. Verdoorn, the South Dakota Supreme Court read § 53-9-5 as 3 tests and put the burden of proving a penalty on the party the clause is enforced against, yet it still voided a kept $50,000 down payment, because nothing in the record showed the parties had discussed that amount as the right one to forfeit on a breach. Dave Gustafson & Co. v. State, the case the test traces to, states that whether a sum is a penalty is a question of law, for the judge to decide. Neither case was about a personal service: they concern the sale of a bar and a highway contract.
“Every contract in which amount of damage or compensation for breach of an obligation is determined in anticipation thereof is void to that extent except the parties may agree therein upon an amount presumed to be the damage for breach in cases where it would be impracticable or extremely difficult to fix actual damage.” SDCL §§ 53-9-4 and 53-9-5 · Safari, Inc. v. Verdoorn, 446 N.W.2d 44 (S.D. 1989) · Dave Gustafson & Co. v. State, 83 S.D. 160, 156 N.W.2d 185 (1968)
Showing your refund policy
No refund-policy disclosure statute was found. SDCL chapter 37-24 (Deceptive Trade Practices and Consumer Protection) was read in full for “refund,” “deposit” and “cancel,” and turned up only the door-to-door sale cancellation rules and storm-damage roofing contracts. The Attorney General’s office has said no state law requires stores to give a refund, exchange or credit for returned merchandise; that statement speaks of merchandise, not services.
Body-art rules and money
Nothing about deposits or refunds in S.D. Admin. R. article 44:12 (chapter 44:12:01 on tattooing, chapter 44:12:02 on body piercing), read in full. The only money in it is the Department of Health’s inspection fee.
This page summarizes public law in plain language, with the source each point comes from, read at the source on 2026-09-23. It is not legal advice.