Canadian Musician contributor Dani Oliva is an artist advocate, speaker, and attorney focused on helping talented creators thrive in the music business. Follow him @olivaesq and visit www.olivaesq.com. Dani will also be speaking at CMW on Sept. 11, 2020. www.cmw.net.
Many events have been cancelled due to Coronavirus (COVID-19) and it remains unclear whether in-person gatherings will resume anytime soon. You may have organized an event yourself, or you may have purchased tickets to Coachella, SXSW, or another entertainment event which was cancelled by industry professionals to stop the spread of the coronavirus and to protect attendees and staff.
When cancellations happen, what are the rights and responsibilities of event promoters and attendees? Who is responsible and is insurance available for any damages as a result? The answer depends on the contract between the people involved.
What Are the Terms of the Contract?
You may be hosting the event or you may be the attendee. Did you sign a contract when you decided to host the event or when you purchased tickets? You may not remember doing so, but many websites have something called a "clickwrap" or "clickthrough" agreement which is digital prompt that you may have clicked when you purchased tickets or agreed to host your event. Look for that agreement on the website, or it may appear as a downloadable link with the link to your digital tickets!
"Act of God" or Force Majeure Clause
Many contracts include a clause called a force majeure, aka an "Act of God" clause, which, if invoked by an unanticipated event such as Coronavirus (COVID-19), a weather-related occurrence, or something of the like, justifies the suspension or cancellation of an event or related performance under an agreement. A force majeure clause is meant to protect the people involved in an agreement if a contract cannot be performed due to an unanticipated event or circumstances outside of the control of the people involved.
Check your agreement for a force majeure clause and see if there is catch-all language that captures occurrences like a pandemic or epidemic. If you see a broad force majeure clause, it will likely serve as a shield of liability if the event does not take place as coronavirus event cancellations likely qualify as an event anticipated by the clause because it is a "pandemic," the government has imposed travel bans and business closures, etc.
No Contract Clause
If the contract doesn't include a force majeure clause, event promoters may still be off the hook as they could invoke a defense such as frustration, impracticability, or impossibility. When an event occurs that is unexpected, beyond the control of the people involved, and makes performance impossible, occurrence of the event can be excused. Though these breach of agreement defenses are fact-specific, in the case of sporting, music, or other entertainment events and coronavirus (COVID-19), closures and quarantine orders by the government would likely excuse the parties involved.
Did the Organizer Have Insurance?
If there is no force majeure clause and no clause in the contract concerning what occurs if there is a cancellation, businesses may carry insurance to protect against the risk of cancellations or related issues. This type of insurance is commonly known as "business interruption insurance." Whether or not the insurance pays out is dependent on the insurance policy and the nature of the event that caused the cancellation. Often, business interruption insurance will cover damages if the cancellation is due to a reason beyond the control of the party that is insured AND if the reason is included or contemplated by the insurance policy.
If the event organizers did not get insurance for a pandemic or communicable disease, they may not be able to collect any insurance proceeds despite the government having mandated cancellation of events.
Most event organizers do not want attendees and people involved to be unhappy due to a cancellation. As such, our office is seeing that many events are being re-scheduled for later in 2020, or larger events being rescheduled for the first quarter of 2021. We are also noticing that event organizers are planning other incentives for attendees and people involved in events that were cancelled. Hold tight and support your community! This too shall pass!