What to Do When Clients Want to Postpone/Cancel or Get a Refund Due to the Pandemic | By: Elizabeth J. McInturff, Esq. and Jared Stape

What to Do When Clients Want to Postpone/Cancel or Get a Refund Due to the Pandemic | By: Elizabeth J. McInturff, Esq. and Jared Stape

COVID-19 has forced many couples to postpone or even cancel their weddings. Subsequently, this has prompted a growing number of disputes between clients and their event vendors about rescheduling/cancellation policies and refunding retainers and other fees. Given the unusual circumstances, vendors were left wondering what their rights are and what protections they have.

The good news is that most service contracts, including the ones provided by wedding and event vendors, have (or should have) clearly stated procedures for what happens if an event is rescheduled/cancelled and what happens to the deposit. Read below to learn more about your options.

The couple wants to cancel the contract and have their retainer refunded – what do I do?

First, find out if your client really wants to cancel or if they just want to postpone. If your contract has a flexible rescheduling policy, you likely can transfer the retainer and contract to a future agreed upon date.

If you cannot agree on a new date or the couple is looking to cancel the contract altogether, look to how the retainer is identified in the contract. Many contracts provide that the retainer is non-refundable. The contract may also specify that the retainer will serve as liquidated damages in the event that the couple cancels. In that case, you likely do not have to refund the retainer.

The couple wants to postpone their date – should I update the contract?

Possibly. You should look at the terms of the contract and determine whether there are any changes that need to be identified within the contract itself. In that case, you very likely will want to update the contract instead of simply amending it with the new date. You may also want to consider adding any additional terms about what happens if the event is rescheduled again.

The couple is threatening to sue me if I do not reschedule or refund their fees – what should I do?

Before shooting off at the client or making any more promises, we recommend that you gather all contracts and communications that you have with the couple and consult with an attorney about the nature of the claim and the likelihood of success.

How do I update my contract to provide me with protections in the future?

Going forward, you should discuss your contract with your attorney and consider adding clauses for rescheduling fees, liquidated damages, and force majeure, among others, to protect you in the event of another pandemic.

The couple is claiming that they do not have to pay because of a “force majeure” provision in the contract – what does this mean?

Savvy couples might have noticed a force majeure provision in their contract. Force majeure means “superior force” in French and refers to a contractual provision that typically operates to excuse both parties from a contract due to unforeseen circumstances beyond their control.

In most force majeure clauses, unforeseen circumstances will include unforeseeable, large scale disasters or “acts of God,” including acts of terrorism, riots, natural disasters, public health outbreaks or labor strikes. Couples who located this provision in their contract might think that this provision will act as a get-out-of-jail-free card, excusing them from their contractual duties, but they should not act so fast!

Because the actual language of this provision is critical, jurisdictions diverge on how they interpret the broadness of such clauses. Generally, courts are guided by the interpretative doctrine of ejudsdem generis – this doctrine provides that the catch-all language is limited to the same general kind or class of those things which are specifically mentioned.

For example, the Virginia Supreme Court used the doctrine of ejudsdem generis as the rationale behind its holding that a force majeure provision excusing performance because of “breakdown, fire, high water, washout, or from any other cause beyond its control” did not apply to many employees contracting an illness that prevented them from working. However, the Court more recently held that “acts of God” can be excused if the act was the sole proximate cause of the other party’s injury.

Likewise, in Maryland and Washington D.C., courts generally will not excuse a party’s nonperformance unless the precise language of the provision identifies the particular circumstances that will excuse performance. For example, in Regional Bldg. Systems, Inc., the Court focused on whether a party’s inability to perform was directly caused by an event identified in the clause.

Although litigation over force majeure provisions is constantly evolving, wedding vendors can likely compel the other party to follow through with the contract unless your force majeure provision contains the word “pandemic.”

If your client has canceled a contract, you should ask your attorneys to examine whether performance is excused under force majeure and other doctrines, including but not limited to the doctrines of impracticability, impossibility and frustration of purpose. If performance is not excused and the other party failed to perform under the contract, you may be entitled to compensation.

Named a Rising Star by both Maryland and Washington, DC Super Lawyers, 2016-2021, Elizabeth J. McInturff, Esq. is a partner at JDKatz, PC, representing clients in complex family, civil and commercial disputes. Jared Stape is a law clerk at JDKatz, PC. For more information, visit www.jdkatz.com.

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