The global outbreak of coronavirus has had many unforeseen consequences. Aside from the tragic fatalities and quarantines, many people are anxious about going about their everyday business. Many events are being cancelled proactively in order to prevent large gatherings that could facilitate an easy spread of this dangerous disease. While this is an important safety precaution, it can lead to legal liability for the parties involved. Events often involve contracts for leased event space, catering, security, and other services necessary to host an event. Breaching these contracts – even for the reasonable goal of preventing the spread of coronavirus – can leave organizers financially responsible for cancellation fees.
If you need to cancel a contract due to coronavirus, it is important to know what legal options you have. Both individuals and business could face liability for breach of contract, even if the breach was caused by circumstances beyond their control, such as a global outbreak of a deadly disease. You must understand the implications of a breach before you decide whether to fulfil your contract or not. Here are some options that are available to you in this situation:
Cancel under an existing contractual provision.
Most service contracts contain some type of cancellation provision. This can be negotiated between the parties, and the cancellation provision can be as strict or generous as the parties agree to. If you have not yet entered into a service contract, it is important to let an attorney draft your cancellation provisions to protect your rights.
Contracts often have boilerplate force majeure clauses that allow a party to terminate its obligations when circumstances arise that make performance impracticable, impossible, illegal, or inadvisable. Typically, these clauses cover natural disasters or “acts of God,” including earthquakes, floods, major storms, and outbreaks of disease. As a result, if your contract has a force majeure provision, you may be able to cancel an event due to the current public health crisis related to COVID-19. To determine whether your contract has a force majeure provision that covers the current crisis, you should speak to an attorney immediately.
Renegotiate the contract for a different date.
A contract can often be renegotiated – especially in unforeseen circumstances, such as a global outbreak of a dangerous disease. Many vendors will be happy to simply change the date of service. A contract attorney can help you renegotiate your contract without incurring additional financial liability.
Breach the contract and prepare for litigation.
If the vendor refuses to renegotiate your contract, you might be forced to simply breach the contract and prepare for litigation. This does not mean that you will automatically be forced to pay the full contract amount. If, for example, health officials in your area have prevented large gatherings, it would be legally impossible for you to fulfill the contract, and impossibility of performance a defense to breach of contract claims. There might be other defenses that apply to your situation. A contract lawyer can advise you on the best way to defend yourself against contract litigation.
Experienced Representation for California Contract Disputes
Claire Kalia is an experienced California contract attorney. She can help you draft contracts that protect you in the event of necessary cancellations. She can also help mitigate your financial responsibility for cancellations due to circumstances beyond your control. Call (650) 701-7617 to schedule a consultation, or book an appointment online.