Have you been invited to any weddings over the past 18 months that have been either postponed or delayed indefinitely? COVID-19 has been crippling to numerous industries that thrive on hosting many people in a single location, but few have felt the pinch more than the wedding industry.
While some events managed to re-work themselves into an online format out of necessity, the wedding industry has unquestionably had a more difficult transition. Many had been preparing for their wedding their entire life and had saved or borrowed significant deposit funds to contribute to their special day. Vendors may have devoted significant resources in time and money to plan for an event. Venues may have turned away lucrative opportunities to book their space because a wedding had already been booked.
Unfortunately, the COVID-19 pandemic and resulting lockdowns and restrictions have forced many of these stakeholders to change plans rapidly, sometimes even on a daily basis, adding stress to an already traditionally stressful event.
Although COVID-19 may not be anybody’s fault…what happens when cancellations are mandated? Should couples get their full deposit back? Should vendors cut their losses? Can event spaces re-schedule the event at a higher price, even if that wasn’t in the agreement? The below discussion highlights some areas for such parties to explore further.
An event or vendor contract may have what is known as a Force Majeure clause, commonly known as an ‘act of God’ clause. This provision is typically included to relieve the parties to a contract of their obligation to perform under the contract if something has happened that could not reasonably have been predicted by either party before the contract was signed, and this ‘something’ (also referred to as a “Force Majeure Event”) has changed the circumstances, making it completely unfair to hold one or both parties to the express terms of the contract. The Force Majeure Event could be a natural disaster like a hurricane, a war or – you guessed it – an epidemic or a pandemic. Unfortunately, prior to the onset of COVID-19, even if you had a Force Majeure clause in your contract, it probably did not explicitly list “COVID-19”, and perhaps did not even list an epidemic or pandemic as a Force Majeure Event. To rely on a Force Majeure clause, the Force Majeure Event should be clearly stated. If the contract was drawn up after March 2020, then some language about the pandemic may have been included in the Force Majeure clause, if one existed at all. Force Majeure clauses should also specify what is to happen when the Force Majeure Event has stopped. Usually, the parties are relieved of their obligation to perform only for as long as necessary. Once the Force Majeure Event has ceased, the parties’ obligations under the contract will be expected to resume, unless the contract has been completely frustrated, as further discussed below.
The other ‘escape’ clause from a contract is the doctrine known as ‘frustration.’ The law of frustration says that if it is essentially impossible to perform the contract, then the parties can be discharged from their obligations on both sides. The threshold here is the important part: it’s not that the contract becomes merely difficult to perform; rather the performance of the obligations must be so radically different from what was reasonably expected before the frustrating event, that the way the contract is intended to be completed would be unrecognizable and extremely unfair to one or both sides. For contracts governed by Ontario law, the Frustrated Contracts Act, R.S.O. 1990, c F.34 states that when a contract is frustrated or becomes impossible to perform, the parties are to be put in the position they were before the contract, which may mean a full refund of a deposit or other money paid towards the fulfilment of the contract.
Frustration can come in handy if there is no Force Majeure clause, but such a claim is not necessarily applicable. For example, some early decisions from British Columbia on whether frustration is available in the context of COVID-19 related delays have stated that contracts for wedding services which have been changed or delayed are not frustrated just because of a change or delay. Rather, it must be truly impossible to continue to perform the terms of the contract. Since circumstances of each individual contract vary widely, the courts in Ontario may come to different conclusions on different facts.
Consumer Protection Legislation
Given that engaged couples would be considered “consumers” under Ontario law, there may be relief available to them under the Consumer Protection Act, 2002, S.O. 2002, c 30, Sch A (The “CPA”). Specifically, sections 21 through to 26 of the CPA deal with “Future Performance Agreements” which the regulation to the CPA states is a contract worth $50.00 or more. Section 26 of the CPA provides that a consumer may cancel a future performance contract if the “supplier” does not “make delivery” within thirty (30) days after the expected delivery date. In the context of a wedding, the “supplier” could be either a vendor or the event venue, and the “delivery” would likely be the services expected. However, whether a vendor or venue contract qualifies as a “Future Performance Contract” must be determined from the outset, as the regulation provides enumerated criteria which should be analyzed in the context of the individual circumstances. As such, a thorough review of the specific contractual terms is required.
Mitigation and Resolution Strategies
As a principle of law, any party that is going to claim damages has a responsibility to mitigate, or in simpler terms ‘cut their losses.’ For engaged couples and for vendors, this means looking at whatever alternate arrangements can be made, such as rescheduling or even postponing the date. This leaves the contract intact, and while the couple may not be thrilled, it can avoid a tremendous legal headache. Similarly, a vendor is also responsible for mitigating, and would be hard-pressed to claim damages for a lost opportunity if they made no effort to offer their services to other couples once the wedding in question is cancelled.
Good faith negotiations are key. If early discussions are not fruitful, we are here to help. We regularly represent parties in contractual disputes and know where and how the various legal tests apply. Contact us today to learn more about our services, and how we may be able to assist in resolving your dispute.