COVID-19 and Event Cancellation

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By Jack Jewell, Company Commercial Solicitor

The unprecedented situation currently affecting the UK and wider world as a result of the Coronavirus (COVID-19) pandemic is having a huge impact on the global economy. The leisure and event industry has been hit particularly hard by the measures introduced by the UK Government. Many businesses had closed their doors before last night’s announcement that those ‘non-essential’ businesses that have not already shut, must do so immediately.

We have already had many enquiries from both businesses and individuals, concerned that the event they had planned cannot now take place. In such a scenario, the following tips may help:

  1. Firstly, check the contract or terms and conditions that you have signed:
    • For a business hosting an event, this may be a good time to review your standard terms and conditions – what are the cancellation provisions? Have you taken a deposit and are you able to retain it? Do you have a force majeure clause, and if so, does it define what type of event may entitle either party to cancel an event? Does your contract allow for a cancellation fee to be charged?
    • Customers should check the same provisions. Some contracts have cancellation fees payable on a sliding scale that increase the closer you get to the event date.
  2. Is timing crucial to the event? Can it be postponed? Whilst it is unclear exactly how long restrictions will be imposed by the government, businesses hosting an event could take advantage by planning in advance and securing future bookings. The retention of a deposit may be a useful bargaining tool in this respect.For businesses and customers, delaying an event may be more palatable than cancelling altogether. It is perhaps a way to try and ensure business continuity as much as possible. If agreeing to a postponement, customers may be able to negotiate an amendment to the contract terms that expressly deals with the COVID-19 pandemic and its impact.
  1. Consider whether the contract has been frustrated. Unlike a clause in the contract such as force majeure or cancellation, frustration is a doctrine applied by the courts. A frustrated contract is one which, after being formed and without fault of either party, is incapable of being performed.
    If a contract is deemed to have been frustrated, the parties are released from their contractual obligations without the right of either party to claim damages. Frustration is narrowly applied and will only benefit the party seeking to get out of their contract applications; it will not benefit the party seeking to rely on the contract.
  1. Even the most prescient of businesses would not have been prepared for the COVID-19 pandemic to disrupt daily life as much as it has. By cancelling an event, businesses will be following government guidelines. In such unprecedented times, proactively engaging with your attendees may be the best course of action to try and agree a future date or some parameters around which the event can be reorganised (possibly online). After all, businesses will be eager to secure bookings to make up for any losses as soon as they can.

Any contracts entered into now or in the future should refer to and cater for the effects of the COVID-19 pandemic. This will ensure that each party understands its rights and obligations and may help to avoid confusion or delayed events in the future.

Should you need any assistance with your contracts (whether in the context of cancelling events or otherwise), then please do get in touch with our Company Commercial team on 01992 300333.

Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.