Covid 19 response Updated 15/ 05/ 20

Supplier Contracts

Every contract should be looked at independently; there is no one size fits all approach and most terms will be different for each supplier. However, English law does not generally allow commercial parties to get out of a bad bargain. Both parties affected by COVID-19 may be required to perform their side of the contractual bargain and may be in breach of the agreement if they do not. In the event of a breach of contract, it is possible to bring a claim for damages against the other party for breach of contract. You may also be able to terminate the agreement in some circumstances. 

The following may provide an exit route out of the contract:

Force Majeure Clauses

In order for suppliers to discharge a contract on the basis of ‘force majeure’, they must have an express term detailing this within their contract. A force majeure clause will usually provide that, where a certain event takes place which is beyond the control of both of the parties, each party will be entitled either to discharge the contract and be excused from performance, and/or to postpone the time for performance.

If there is no express term to this effect within the contract, it cannot be implied and a supplier will not be able to rely on this concept. Equally, the precise wording of the term and what constitutes a force majeure or an ‘Act of God’ will often be expressly qualified and if the clause is used, but later turns out not to cover the situation you are dealing with, there may be a substantial damages award payable to the other party. The wording of the contract will need to be looked at in each case. 

A party seeking to rely on force majeure will usually be required to prove that the impact of the event has prohibited (or severely hindered) their ability to perform the contract. The parties will therefore need to consider carefully whether performance has been prevented by COVID-19, or just simply made more expensive, which in itself may not be enough to discharge the contract.

Frustration of Contract

If there is no force majeure clause in the contract, a party may be able to discharge the contract as a result of frustration.

A contract may be frustrated by COVID-19 where it becomes impossible to perform (e.g. the venue is closed and cannot host the wedding), or where, as a consequence of the virus, a party’s contractual obligations become radically different to what was envisaged at the outset. If a contract is frustrated, the contract can immediately be terminated, and both parties released from performance.

So, Postpone or Cancel?

There is a very important distinction between postponing and cancelling, and it is worth bearing in mind that the UK events industry has effectively just had to write off billions of pounds which would otherwise have helped significantly to keep the economy afloat. Wedding venues and suppliers alike will therefore have thoughts on when they can get back to business as usual at the forefront of their minds. 

This is likely to mean that as soon as you say you want to ‘cancel’ your wedding, the need for venues and suppliers to survive the COVID-19 trough in trading may make them reluctant to refund any money to couples if they are prepared to postpone the event instead, and therefore stick very rigidly to the agreed cancellation terms of the contract, regardless of the current crisis.

On that basis, if couples reach a point where it becomes clear that their wedding cannot go ahead, they should try and postpone the wedding with their venue and suppliers. The general feeling seems to be that venues and suppliers are willing to show empathy and understanding in the current climate, by agreeing to postpone weddings to an alternative available date at no extra charge, or perhaps a small charge if you have changed to a Saturday instead of a date mid-week, for example. Many suppliers have agreed to work beyond the terms of their contract with couples in this regard, which is positive. 

However, there will always be instances where a supplier acts unreasonably in this regard and may be seeking to profit from the unfortunate circumstances. Just as supermarkets should not be hiking their prices up for desirable goods at this time, wedding venues and suppliers should not be deliberately profiteering from the crisis by telling couples that they must either pay extortionate extra fees to change their date, or lose the money they have paid entirely. If couples have been affected in this way, they may wish to raise a formal complaint to their supplier, with a view to having those extra fees waived. 

Ellis Jones Solicitors