In light of these changing circumstances, many events will need to be cancelled. With pre-paid deposits and cancellation policies, cancellations can incur large, unprecedented costs. If you have a contract which is affected by Coronavirus, you may still be liable to pay for cancellation fees, even if government mandates are the cause of a cancellation.
Contracts with a force majeure
Contracts usually have a force majeure clause, which clearly describes what will happen in the event that the contract is broken due to factors outside of either yours or the supplier’s control, including liabilities. Therefore, it is paramount that you check this wording as it will impact whether disruptions from coronavirus will excuse you, or the supplier, from obligations.
A force majeure may also cover postponements, rights to terminate, liabilities or which party bears the cost of disruption.
Contracts without a force majeure
If a contract does not have a force majeure, you could terminate the contract without obligation. However, you would have to demonstrate that: the specific disruption is covered in the wording, Coronavirus prevented or delayed fulfilment of the contract, and you took all necessary steps to mitigate the circumstances.
The legal concept “frustration” could benefit you. This applies when there has been a dramatic change in circumstance, which makes it impossible to fulfil the contract, and would terminate the contract. However, this does not often apply, and would need to be reviewed per case.
Finally, you may be protected under insurance, so it is worth checking your policy.
These are for guideline purposes only. For more information regarding contracts and your rights speak to the partner who normally deals with your affairs.Back to top