PaulCovid cancelled a LOT of shows. And it also caused us to change the way we write contracts for future shows, since we can’t know whether they’ll be allowed or safe.
Some people have been looking to ‘force majeure’ clauses in their contracts to excuse non-performance due to COVID-19. These clauses set out lists of the types of situations (acts of god, terrorism, hacking) that excuse performance under the contract by one or both parties. In the case of live music events, this can work in either direction – where an artist was guaranteed a payment, the promoter can try to get out of it, and where an artist promised to perform, they can try to excuse themselves.
Where there isn’t a force majeure clause in a contract, parties can look to common law doctrines of frustration, or impossibility of performance. These deal with unanticipated scenarios that either frustrate the underlying purpose of the contract (e.g. a flood closes all roads, so nobody can attend the performance you contracted to perform) , or render performance of the contract impossible (e.g. a flood closes the venue, so you can’t perform at all).
BC’s online Civil Resolution Tribunal has been dealing with several force majeure claims in the COVID era, and has been finding that a contract can’t be frustrated under the common law doctrine by something that’s addressed in a force majeure clause – the very presence of it in a force majeure clause means it’s been anticipated (see here, for example, at para 21). In these cases, the wording of the force majeure clause might determine the outcome.
So what’s the issue? For one, the Supreme Court of Canada once told us that a force majeure clause “generally operates to discharge a contracting party when a supervening, sometimes supernatural, event, beyond control of either party, makes performance impossible. The common thread is that of the unexpected, something beyond reasonable human foresight and skill.” The case where the Supreme Court said that (Atlantic Paper Stock Ltd. v. St. Anne-Nackawic Pulp and Paper Company Limited, [1976] 1 S.C.R. 580) involved an agreement by a paper mill to purchase waste paper for a period of 10 years. The force majeure clause included “non-availability of markets” for paper products. But later, when some questionable business decisions led to a reduction in demand for paper, the Court wouldn’t let the mill off the hook; the bad business decisions were in their control and their result was thus anticipated.
So here’s the problem: Can you really argue that a COVID-related cancellation is an unforeseeable at this point? In other words, if you include “pandemics” in your force majeure clause, can you rely on that clause if your event is cancelled due to issues related to the highly foreseeable ongoing pandemic?
In some cases, instead of jamming ‘pandemics’ into force majeure clauses during a pandemic, it could be more prudent to specifically address cancellation conditions related to the current pandemic in the contract.