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by Laura Bickle
As planners scramble to “unplan” their events and struggle with postponement questions, understanding contracts is more important than ever. Heather Reid, founder and CEO of London, Ont.-based Planner Protect, a contract review agency that negotiates event contracts for organizations and individuals, shares her guidance on navigating existing contracts and what the future may hold.
Is the pandemic a force majeure?
Cognizant that I am not legal counsel, it is my understanding that with the World Health Organization (WHO) declaring COVID-19 a worldwide pandemic—along with most provinces and many local regions declaring states of emergency, transportation curtailment and government regulations limiting gatherings to small numbers of people—events held in Canada in the immediate future are in jeopardy of not being able to fully execute their contractual obligations for extenuating reasons that are beyond their control. This is the premise of Termination (a.k.a. force majeure) and could therefore position hosts of events to invoke their Termination contractual language.
What if a contract does not specifically name a pandemic a force majeure?
It is my experience that there could be vague words in the termination clauses that legal counsel may be able to use to argue that a pandemic could be a reason for invoking the clause—without the actual word “pandemic” being included. These words could include: acts of God, incidents of force majeure, or even “examples beyond the control of the parties, such as.....”
What if a contract does not have a force majeure or other relevant clause that covers the pandemic?
Despite the contract not specifically having termination language, there could be a legal premise called “doctrine of frustration” that could be explored. In this case, if the context under which the contract was mutually negotiated and signed is radically different than the current circumstances, and thus the purpose of the event has become “frustrated,” there may be legal recourse that could be explored.
What are your thoughts on putting fees into escrow?
I have long talked about “protecting” ourselves as event hosts—and as such have taught and written about the benefits of using escrow services when it is appropriate. Protecting our clients’/employers’ finances is critical—and putting those financial resources into a safe repository while we are waiting for our events to be realized protects us should anything happen to the venue’s viability. It would be regrettable for any event host’s deposits to be lost in a foreclosure, bankruptcy, etc.
What would you advise to planners who are rescheduling in terms of contracts?
Invest in expert opinion and legal counsel to review the indemnification, termination and cancellation clauses to ensure that the venue’s language is relevant to our new realities. It is my opinion that our venue partners will be investing in legal counsel to tighten up and reposition the language in these clauses to further limit their risk—and as always (and especially now), we as planners and event hosts, need to be just as savvy and informed!
Realize that rescheduling an event does not necessarily mean a cut-and-paste of the terms
of the contract from the original dates to the
new dates—and we as planners and event hosts should be prepared to re-examine and re-prioritize our “wants” and “needs.” With the compressed inventory in the foreseeable future, along with the industry’s desire to financially recover, our venue partners will be negotiating differently.
We are in a new reality that requires us to renegotiate contracts that are more conservative in attendance expectations and financial obligations, and more flexible in terms of deadlines, sliding scales, deposits, etc. How live events will be responded to is yet to be seen and it would be prudent to scale back as we move forward.
The above article is for general information purposes and does not constitute legal advice.
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