Search

Coronavirus Cancellations – Who picks up the tab?

Two months ago, few had heard of Cornavirus, or COVID-19 to use its proper name. A few weeks on and the news is filled by little else and I’m receiving regular e-mails cancelling events or gatherings, that I was planning to attend.

Most of those events were social gatherings, but with the cancellation of Italy’s Six-Nations match and the Geneva Motor Show, it seems only a matter of time before a major event is cancelled in the UK – but if one is cancelled, who picks up the tab?

Any lawyer is bound to tell you, “It depends on the contract”, but it can be very much more complicated than that. Let’s take a major event such as the Glastonbury Music Festival. It is not impossible to suppose that this June event could fall victim to COVID-19. Who would be affected if it were cancelled?

Well the music fans who’ve bought tickets are the most obvious. Presumably if the event did not take place they would be refunded, they are consumers and are well protected. But there are very many more parties affected.

The musicians – they’re probably wealthy enough that few will be concerned for them, but their services were likely engaged through service companies and agents – what cancellation arrangements will be relevant? Were they engaged on the festival promotor’s terms, or their own? Will there be a cancellation fee payable – or are there force majeure clauses allowing cancellation without penalty?

What about the stage companies engaged to erect the stages, stands and marquees – what do their contracts provide for. The fencing contractors who will have been engaged to erect many miles of fencing around the venue and the sub-contractor fencing companies engaged in turn by them? Whose terms and conditions were used and what are the cancellation arrangements for them? What about the hotel accommodation booked to house those workers – did they opt for a cancellation option? Or are they stuck paying for rooms they don’t need?

The hundreds of fast food providers who have contracted to sell their wares within the showground – can they now be cancelled without penalty? And what if they have hired in extra facilities, stands, generators, and chillers for the weekend – can those arrangements be cancelled without consequence? Have advanced food orders been placed already – and is there a consequence if those are now changed? It may be that the Glastonbury weekend was the biggest profit weekend of those vendors’ year – are they able to recover the profits they lose? Probably not, but it will again depend on the contract. Or perhaps they hold business interruption insurance which covers the loss?

The security companies, the sound system providers, the tent suppliers, the bar operators, the transport and logistic companies. Each relationship will mean another contract to consider and probably sub-contractor contracts beneath those.

There is then the question of insurance – which if any, losses are covered by insurance? Can the insurer avoid liability? Is there a policy exclusion for disruption caused by disease?
Ultimately someone, or more likely various parties, will have to pick up the tab or part of it. That might have knock-on effects for certain of those businesses – it may push some into insolvency. The consequences are far reaching and go well beyond the immediate event.

Now pause and consider the effect of multiplying the issues above by a huge number of events which might potentially be cancelled – more festivals, football games, rugby matches, music concerts, motor racing and horse racing, exhibitions and conferences. The potential repercussions are huge.

So what should you do if you are a venue operator, a promotor or a contractor thinking of cancelling an event or likely to be subject to cancellation? First and foremost, check your contract and seek legal advice to establish the contractual effect of any termination before it occurs. How, and just as importantly when, you terminate could have a bearing on where the ultimate costs fall.

Send us a message