CAFTA Resource for Creatives: Handling COVID-19 Event Cancellations
COVID-19 has left Colorado creatives, including photographers, videographers, musicians, and others who depend on live events, with an overwhelming volume of cancellation requests as a result of cancelled events. The best outcome for both the creative professional and their client is typically to mutually agree to reschedule the event, or otherwise postpone the creative’s services. If your client is up for rescheduling, but doesn’t have an exact date yet, consider putting a time limit on the offer to transfer payments to the new date so you don’t indefinitely have an outstanding obligation to your client (e.g., offer your client a reschedule before the end of 2020, within 12 months, or before the of 2021).
If you’re unable to reach an agreement to reschedule, you may need to assess the exact extent of the protections your contract offers you, if you have a written contract. To evaluate the extent of your contract’s protections, you should look at both your contract’s Force Majeure clause and your contract’s cancellation clause.
Some COVID-19 cancellations may qualify as Force Majeure events, and others may not, a lot depends on the circumstances surrounding the transaction.
If the contract with your client at issue has a Force Majeure clause, the following steps will help you with your analysis of what your contract provides for under these circumstances:
- Step 1: Does the Force Majeure clause apply?
- Look at the definition of Force Majeure events in the contract. Usually there is a list of events, and a catch all like “events outside the parties’ control, including, without limitation. . .”
- Whether each individual situation qualifies as Force Majeure will depend not only on the language in the contract, but also on the circumstances of the situation. For example, inability to attend a wedding due to a travel ban, government limit on event size, or shelter-in-place order is a clearer instance of a Force Majeure event than a decision not to move forward because social distancing is encouraged.
- Unlike other clauses in your contract that are written directly and explicitly to cover situations that you expect to arise, Force Majeure clauses are written broadly because by nature you can’t predict what they will need to cover. This means that the nature of Force Majeure clauses makes their interpretation less predictable than other clauses that speak to specific policies that are written to reflect common issues that arise with your clients..
- If your contract with your client does not have a Force Majeure clause, or if you do not have a written contract with your client, there is background law called the “doctrine of impossibility/impracticability” that may also offer you protection.
- Look at the definition of Force Majeure events in the contract. Usually there is a list of events, and a catch all like “events outside the parties’ control, including, without limitation. . .”
- Step 2: If the Force Majeure clause applies, what does the Force Majeure clause specify happens?
- Most commonly, the the clause excuses further performance by either party. This often allows the creative to keep any initial payment or retainer that served to reserve the client’s spot on the creative’s books or compensated the creative for pre-event work.
- Step 3: If you decide the Force Majeure clause does not apply, what does your standard cancellation clause say? Look at your standard cancellation provisions. It’s these standard cancellation clauses that are likely to apply if someone is cancelling due to illness or personal preference to avoid travel rather than government order prohibiting an event.
If you don’t have a formal written contract with your client, it is especially important to make an effort to negotiate a favorable outcome directly with your client. If your client is asking for a refund and will not agree to reschedule or transfer the payment to other services, you may still have some grounds to deny a refund request even without a written contract. You will likely have the more success keeping past client payments if you can show work you have done to earn the fees.
Remember that in situations like this one, customer service goes a long way in reducing the risk of a dispute with your clients. Show compassion for your clients. I always remind my clients that bad bedside manner is a bigger cause of lawsuits than bad medical care.
If you have clients with events in the near future that haven’t yet been cancelled, consider proactively sending them an email and letting them know you are here to support them and serve as a resource as they make tough calls about how to handle their events. If you have to deliver the bad news that your client is going to lose out on payments to you, do it with kindness.
Disclaimer: This blog post is intended for informational purposes only, and is not intended to serve as a substitute for legal advice. If you need advice about a specific situation your business is facing, consult with an attorney in your state.
About the Author: Allie Moore is an attorney serving Colorado creative small businesses. She’s also an entrepreneur with 10 years of experience operating a photography business.
