A death in the family is understandable, I would imagine they would be postponing rather than canceling (that seems strange to me) I can only assume the rest of the vendors weren't as kind as you to offer them full/mostly partial refunds but you'd think they would still have some sort of party if they are still planning on a wedding. I guess it doesn't matter, it sounds like its been more of a headache than anything else! I'm curious why they postponed the first time, did they give you an explanation?
Small or large business, it hurts. You reserved two dates for this family, planning, sketching, consultation, purchasing supplies, potential loss of other business/family/free time...I realize most people don't really get how much planning and preperation we go through, not to mention countless hours refining skills, trying new recipes, etc.
Like I said, I recently went through a similar situation, I suppose that's why I'm ranting so much lol. But I've since made changes to my contract (which I didn't even have my bad experience customer sign since we were close, I just wrote out a detailed quote including flavors, sizes, etc & a final sketch) I charge $25 for tastings and ask they bring 3 people or less, (one of my first consultations-which were initially free- the bride wanted to taste 8 or 9 different flavors and bring her entire wedding party plus both sides of parents, I offered to make three flavors for her to try free of charge but additional flavors would be extra) if they book with me that day it goes toward their cake. I also ask for 50% up front and the other 50% two weeks prior to their event.
Again, a death in the family is completely understandable, and I think you did a very kind thing giving her the refund-I think it was awful of her to accept the entire refund after she told you '...business was business'!