Corona Virus, Weddings & Events, and Force Majeure
/Let’s talk about it: the Corona Virus.
It’s been about a month since the spread of COVID-19, aka Coronavirus, started really taking hold. We’re starting to see unprecedented travel restrictions and supply chain interruptions that are causing a ripple-effect into other areas, causing clients and businesses to reschedule conferences, travel, meetings, and events. Heck, there’s talk of postponing the 2020 Olympics in Japan.
And while we shouldn’t panic about Coronavirus, we do need to proactively plan for its effect on our businesses. Part of this is understanding what your contact says when it comes to emergencies.
While economic considerations are always secondary to human well-being, we do need to consider how this situation will impact our wallets. Will we have to refund? Will you get sued if you don’t show up? When is an event considered “bad enough?” What if couple wants to postpone? How do we deal with the money? This is a LOT, so Let’s dive in.
FORCE MAJEURE: WHAT IS IT?
A force majeure is your “Acts of God” clause. Simply put, it excuses a party from completing a contract when certain circumstances beyond our control happen, making performing your obligations illegal, extremely dangerous, impossible, or commercially impractical. (For some other explanations, see this article") These are the types of events that are unforeseeable, unavoidable, and impossible to overcome. “Impossible” doesn’t mean “expensive” or “anxiety-inducing;” it means “Hey, the government said we’re in quarantine” or “There is a hurricane headed this way and the surrounding areas are under a foot of water.”
There are certain force majeure-ish causes built into the law generally— those are considered “common law” relief in the form of contractual “impossibility.” These are generally narrow, and require….. well, extreme danger or literal impossibility. So this means that even if you don’t have a force majeure clause, there might be some assistance for you in the case of a “BIG PROBLEM.”
But usually, we don’t want to risk that an event won’t be deemed “bad enough,” and we add clauses to our contracts that specify how and when these rules kick in. To assist in widening the interpretations of what “counts” as force majeure, we provide examples of force majeure events in our contracts (think of contracts as the “hot sauce” and general legal principals as the burrito). However, not all clauses are alike, and it’s important to look closely at yours.
With recent occurrences like the Charlottesville riots, Hurricanes Katrina and Sandy, and general wild-and-crazy weather (global warming!), force majeure clauses have been becoming increasingly important. In some parts of the country, courts interpret force majeure clauses narrowly and include only those events named or closely-related to the events listed in a force majeure clause. This is why it’s VERY important to draft these clauses carefully.
For example, compare the following situations:
Your force majeure clause includes occurrences “including fire, flood, civil insurrection, or government decree.” A narrow interpretation might only include “fire, flood, civil insurrection, or other government decree.”
BUT: compare a clause like this: “occurrences including but not limited to fire, flood, civil insurrection, or government decree, or other events reasonably outside of the control of the Parties.” By including language like “including but not limited to” and “or other events outside of the control of the Parties,” you’re expanding the clause to encourage including types of events. Essentially, this signals to a court that “Hey, we may not have included every single event or occurrence that would cause this force majeure clause to kick in, but these are the things we’re thinking about!”
HOW DOES THIS AFFECT YOU?
Force majeure is extremely fact specific, so lot of this is going to depend on (i) your exact situation, and (ii) whether you’re relying on that narrow common law view or a slightly wider view provided by your contract. For some, it may simply excuse delay or your non-performance. You may be able to keep your nonrefundable retainer fee/ deposit, but it is also kind of unlikely unless it’s been VERY specifically spelled out. Look to your contract as a road map to determine (1) if there is a road map for an event postponement, (2) what the financial implications are, (3) if you’ve disclosed how a nonrefundable deposit will be applied in the instance of a force majeure, and/ or (4) if you’re relying totally on common law impossibility or you’ve supplemented with your “hot sauce” / the FM clause in your contract."
That being said, remember that force majeure clauses apply to your clients as well. They can’t just call “Force majeure! We don’t have to pay you!”— it doesn’t work that way. They are held to the same standards of impossibility. So just because a client cancels their wedding because “a bunch of people won’t fly because of Coronavirus”— that doesn’t necessarily amount to force majeure. They’re still on the hook to pay you until the CDC or U.S. Government grounds flights or issues more aggressive travel restrictions.
SO……IS CORONAVIRUS A FORCE MAJEURE EVENT?
At this point, it’s hard to say, but it looks like a big outbreak of the Coronavirus may “count” as a force majeure event if aggressive restrictions on human-to-human contact are put in place. Remember that EVERY evaluation is going to be very fact specific. To "kick in,” fulfilling that contract needs to look “IMPOSSIBLE,” and not just slightly dangerous or unsavory. That being said, even if your contract isn’t completely clear, it’s likely a massive pandemic with significant restrictions on travel and human interaction would trigger a force majeure situation—so just make sure you’re aware of how your contract handles the financial implications.
So what’s your task list? 1) Read your contract. 2) Keep up-to-date on any travel restrictions (if you’re travelling for an event). And 3) keep your clients informed. No need to panic; just be proactive. 🙂
