"If performance of this Agreement or any obligation under this Agreement is prevented, restricted, or interfered with by causes beyond either party’s reasonable control (“Force Majeure”), and if the party unable to carry out its obligation gives the other party prompt written notice of such event, then the obligations of the party invoking this provision shall be suspended to the extent necessary by such event. The term Force Majeure shall include, without limitation, illness, acts of God, fire, explosion, vandalism, storm or other similar occurrence, orders or acts of military or civil authority, or by national emergencies, insurrections, riots, or wars, or strikes, lock-outs, work stoppages. The excused party shall use reasonable efforts under the circumstances to avoid or remove such causes of non-performance and shall proceed to perform with reasonable dispatch whenever such causes are removed or ceased. " - sample force majeure clause
Almost overnight, COVID-19 has upended the entire nightlife and entertainment industry—clubs are shut down, weddings have been postponed, and social events were cancelled. As unsalaried independent contractors, this has left DJs and other event professionals in a financial bind. Moreover, COVID-19 has created uncertainty about its effect on existing contracts and whether parties will be able to comply with their terms. Specifically, many vendors are now seeking to determine if their clients may invoke a force majeure clause to excuse performance of their obligations. Accordingly, it’s helpful to explain what a force majeure is and what other legal remedies may exist.
Force Majeure Clauses
A force majeure clause is a contract provision that releases the parties from their contractual obligations due to the occurrence of extraordinary circumstances that are beyond their control. In other words, this provision lists the limited occurrences when a party may fail to perform without liability. Typically, it contains boilerplate language and lists events such as “an act of God,” strikes, or war.
A client may invoke the force majeure clause in a contract as justification for not paying a vendor for an event that was canceled or postponed. Conversely, a vendor may refuse to perform due to the occurrence of an event specified in the force majeure clause.
Does COVID-19 Fall Within the Scope of a Force Majeure Clause
Generally, force majeure clauses are interpreted narrowly, so it’s important to parse the specific text of each clause to determine its scope. If the clause only refers to an “act of God,” then this may not cover COVID-19. However, if the text specifically includes “epidemic,” “pandemic,” or similar language, then COVID-19 would fall within its scope. In addition, the clause may reference “government order or regulation,” which would cover executive orders limiting the side of gatherings and closing certain establishments.
The text of the provision will also define how restrictive it is: would a “pandemic” make it impossible for a party to perform its obligations; or would it be inadvisable or commercially impracticable. For example, suppose that a couple contracts a DJ to perform at their wedding on July 1, 2020 and the couple is now reconsidering postponing the wedding and canceling their current contract (or alternatively, the DJ does not feel safe being around a group of people and wants to get out of the contract). First, as of today, none of the executive orders limiting the size of public gatherings extends to July 1, 2020. And even if they did, they usually permit gatherings of less than 10 people. Thus, while it would be inadvisable to have the wedding on July 1, 2020, it would not be impossible.
Lastly, the clause may also require that notice be given to the other party and specify how the notice be given. To use the example above, if the DJ decided it would be inadvisable to perform at the wedding, they should look to whether clause requires them to provide notice to the couple within a certain timeframe.
Alternatives to Force Majeure Clauses
In the absence of a force majeure clause, or if a party cannot successfully invoke it as justification for nonperformance of their duties, contract law offers additional defenses.
A party may be excused from performing their obligations under a contract if an unforeseen condition occurred, such that the unforeseen condition makes performance of the obligation extremely expensive, difficult, or impossible. Application of either defense is very fact specific. Turning again to our earlier example, if an executive order limiting the size of public gatherings and/or closing certain establishments was extended past July 1, 2020, it would not be impossible for the couple to reschedule the wedding to another date. On the other hand, rescheduling the wedding to a date into the future could be so extremely expensive, that it would be impracticable. The timing of when the contract was signed also matters: if the couple signed the contract after March 11, 2020, when the World Health Organization declared COVID-19 a pandemic, then the government-imposed restrictions were reasonably foreseeable.
Frustration of Purpose
Another defense is that of frustration of purpose- when an unforeseen event defeats the purpose for which a party entered into the contract. Looking again to our example, the couple booked the DJ to entertain the guests at their wedding. However, even though it may not be impossible to have a wedding, limiting the size to less than 10 people defeats the purpose of having a DJ.
COVID-19 does not automatically invalidate existing contracts. DJs and vendors should carefully read the force majeure clauses in their contracts to determine whether they or their clients would liable for non-performance of their obligations. That is not to say that they should be heartless and inconsiderate of a client’s circumstances—they should be flexible and understanding. However, they should also be aware of their contractual rights, should an issue come up during rescheduling. Conversely, the force majeure clause, along with the aforementioned legal doctrines, may excuse DJs from performing in future gigs.
This article is provided for general informational purposes only and should not be construed as legal advice. This article is not intended as legal or business advice, shall not be construed as creating an attorney-client relationship, and an attorney or other professional specializing in the field should be consulted.