How to protect your business in the face of a coronavirus event cancellation April 7, 2020

In these times of uncertainty, where circumstances can change abruptly and without warning, protect your next event, performance or organised public gathering (“event”) from the unexpected with a force majeure clause

Event cancellations due to coronavirus

COVID-19 is highly infectious. For many people, it’s also deadly. The Australian Government has attempted to combat the disease with unprecedented restrictions on public and private gatherings, forcing cancellation of planned events. The effects are severe. Lost income and employment opportunities are two examples. But a force majeure (FM) clause may help protect your business, even when faced with a coronavirus event cancellation.

How can FM clauses protect my business?

FM clauses are contractual provisions that allow parties to suspend, or terminate, the performance of contractual obligations when certain extraordinary events or circumstances arise. Those events or circumstances:

• Are beyond the parties’ control; and
• Make the continuation of an event inadvisable, illegal, or impossible

FM clauses can cover circumstances and events such as war, terrorism, strikes, riots or crime. Other events are covered, which are described by the legal term ‘Acts of God’ such as hurricanes, flooding, earthquakes and volcanic eruptions.

How to use FM clauses in event agreements

For events, a comprehensive FM clause should address:

• Definition of events covered
• What will happen if there’s an FM event
• Which party can suspend performance
• What will happen if the FM event continues for more than a specified period

If there’s no FM clause in your agreement, you may be left to the mercy of the common law contract doctrine of ‘frustration of purpose’ which is difficult to establish and rarely results in excuse of performance.

How we can help you

In the current world climate, it is important that you and your events have adequate protection against FM events. Our Entertainment Law team can provide you with comprehensive legal advice to ensure that the FM provisions in your contractual agreements are tailored to your specific needs.

Contact us for advice about coronavirus event cancellations.

DISCLAIMER: We accept no responsibility for any action taken after reading this article. It is intended as a guide only and is not a substitute for the expert legal advice you can get from marshalls+dent+wilmoth and other relevant experts.