As COVID-19 protection measures continue to result in closures and disrupted travel plans, many organizations are facing the reality of canceled events or disrupted services. Often, these events have been in the works for months or even years, and organizations may be facing significant lost revenue from sponsorships and attendance revenue. To add to the financial blow, many organizations are realizing that they may be on the hook for significant cancellation fees under their contracts.
To avoid these fees, organizations are looking—sometimes for the first time!—at the force majeure language in their event and service contracts. Broadly speaking, force majeure provisions enable a contract party to cancel or terminate a contract without penalty or with reduced penalties if the parties can’t perform under the contract.
But whether you can actually rely on a force majeure clause to escape hefty cancellation fees will depend on the language of your specific contract. Generally speaking, you will have to show that it is “impossible” to conduct your event, which can be difficult. You’ll want to provide specific information as to why your event cannot be conducted or services can’t be performed. Has public transportation been curtailed such that individuals will not be able to reach the event center? Is the event center located in or close to a quarantined area? Are there any travel restrictions in either the location where your event is being hosted or from where the majority of your attendees will be traveling? Has a declaration been made by the city or town where services are to be provided? This may require reading the guidance published by a governing authority to understand exactly what is being prohibited.
If you can’t meet the high burden of showing your event is impossible to host or that services cannot be conducted, consider negotiating a new event with the same vendor to lessen your cancellation fees. Everyone is being hit with closures as a result of COVID-19, and vendors and event centers may be more willing to renegotiate terms if they can set up future services or upcoming events.
Finally, don’t forget to look ahead! Boilerplate language is often ill-suited to your specific needs, and in particular, people skip right over force majeure clauses when reviewing contracts. When you are entering into a new contract, there are a variety of specific terms you can include that will give you more flexibility to avoid a similar situation in the future.
Please don’t hesitate to reach out to us (email@example.com or 703-687-6188) if you need assistance in cancelling a contract for force majeure or negotiating new terms going forward.
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