The COVID-19 crisis is moving at an alarming pace and it may only be a matter of time before the UK Government announces measures to try to contain its spread. In particular, consumer-facing businesses responsible for holding large-scale public gatherings (such as concerts, performances or conferences) are not only facing the prospect of customers pulling out, but that they themselves may have to cancel such events. This might be out of choice (ie from a PR perspective), because a significant number of guests have cancelled their bookings, or because the Government puts controls in place in respect of large scale gatherings.
In our last briefing on this topic, one of the issues we looked at was whether suppliers which were prevented or delayed from performing their contracts because of COVID-19, could rely on force majeure clauses to sidestep liability for non or late performance.
Here, we look at similar issues for consumer facing businesses which are forced to cancel events, where consumer protection legislation adds an extra layer of complexity (as compared with business to business contracts).
What are force majeure clauses?
Ordinarily, breach by a party of its obligations under a contract resulting from non performance or delayed performance, would result in that party being liable to pay the other party the losses that they suffer as a result of the breach. However, if the party's non performance or delay in performance was caused by an event which was outside their control, and where that circumstance is addressed by a force majeure clause in the contract (which typically includes a list of such events), then the party relying on the clause may be able to side step the liability that would ordinarily have arisen as a result of their breach. Force majeure clauses can vary hugely in scope and effect but this, in broad terms, is their raison d'etre, and in the current COVID-19 climate, the spotlight is shining on them like never before.