As event cancellations have started to mount due to the growing number of Covid-19 cases around the country, there has been a lot of concerned conversation occurring about the invocation of force majeure clauses in performance contracts.
If you are not aware of its application, the clause generally relieves all parties of their contractual obligation due to severe weather, natural disasters, civil unrest, government declarations, union actions and epidemics.
I say generally relieves because there has been communication to my state consortium that some organizations are seeing contracts which include penalties for invoking the force majeure clause which pretty much goes again the intent of the clause.
Lawyer Brian Taylor Goldstein of GG Arts Law recently made a blog post in which he discusses some of the questions he is getting:
While not at all unreasonable concerns, we get the sense that people are “preparing for battle” rather than accepting the reality of a shared crisis in which we all find ourselves. For instance, we have been told:
- That venues are “legally” required to educate their audiences not to be led by fear and racism. (Since when? I missed this in law school.)
- That artists should not be allowed to cancel unless they come from the specific part of a country where there have been cases. (So it doesn’t matter that an audience is not going to come to see a South Korean artist regardless of what part of Korea they have just arrived from?)
- “They cancelled a month ago, before there were any outbreaks, so they shouldn’t be able to get the benefit of that now!” (So, the fact that they wound up making the right decision is irrelevant?)
- “The coronavirus cases in their state is not anywhere near where their venue is located!” (Do you live there? Are you planning on going to the concert yourself?)
This preparation for battle is somewhat understandable. Typically you might only face a handful of cancellations for force majeure reasons in a year. Those are quite inconvenient and financially problematic. However, facing a large number of cancellations in your immediate schedule, plus the potential for a indeterminate number to come if the situation draw out can be devastating to both organizations and artists.
Goldstein offers the following “advice”:
STEP 3: Discard Your Contract and Accept Reality
The legal concept of Force Majeure or Act of God anticipates situations where one or both of the parties to a contract cannot meet their obligations due to something outside of their control and which could not have reasonably been anticipated. A fire in the venue. An artist gets sick. A snowstorm closes an airport. Etc. However, there does not have to be a physical impediment to the performance for a performance contract to be permissibly cancelled due to a force majeure. Does a theater have to actually burn all the way down? Can the artist insist that they are still willing to perform on what’s left of the smoldering stage? What if the artist is sick, but not dead? Can the venue insist that the artist be dragged on stage with a portable oxygen tank?
However, even if you believe a cancellation is unreasonable or even if it goes so far as to violate the terms of the contract, what then? Raise contractual and legal arguments? Send snippy and condescending emails? Bring in a lawyer? Sue? While there are almost always legal arguments and threats one could through at any situation, doing so with regard to anyone’s response to an unknown and spreading virus which is causing world-wide fear and confusion is not merely delusional, but will certainly trigger ethical, professional, and PR concerns that will haunt you far beyond any lost income.
North American Performing Arts Managers and Agents (NAPAMA) recently released an FAQ providing some information and guidance about how to handle cancellations. These include discussions about whether a force majeure situation exists; how to handle deposits that have already been made; suggestions of mitigation strategies; information on how this impacts foreign artists and their visas; dealing with the possibility that an event may be cancelled; and suggested force majeure language for your contracts if you don’t have them already.
One thing NAPAMA mentions that is important to note is that while the language for a force majeure clause is pretty standard from contract to contract, (there are definitely variations so don’t skip over it assuming you know what it covers):
Yet in practice, there are many definitions. Force majeure is a concept, not a thing, and as such, when discussing force majeure, it is important to remember that two people may think they have the same definitions and assumptions and discover that they do not. Most misunderstanding around force majeure come from assumptions.
Currently some venues and producers are cancelling events prior to a strict “event” as defined above. Some have argued there is a legal argument to include a coronavirus cancellations within an existing force majeure clause.
[…]Artists, technicians, administrators and everyone involved in the arts community are facing an unprecedented situation as events get canceled or postponed. Ultimately, we believe that the arts are about bringing people together. We share emotions and ideas. These connections strengthen us. Looking forward as we work our way collectively through this pandemic, we are hopeful that the artists, organizations, and everyone who make up our arts community will come together and be stronger for it.
Disclaimer: What is a blog post about a legal topic without a disclaimer? This is not legal advice. You should not be getting your legal advice from a blog post. The purpose of this post is to give you things to think about, especially in this time when the situation with the Covid-19 virus continues to evolve. Speak to a lawyer about specifics.