It is no secret that the rapid spread of COVID-19 will have had sports bodies, event organisers, suppliers and partners studying their contracts to understand their rights and obligations during these unprecedented times – including whether the pandemic, or its knock on effects on government regulations, travel restrictions, etc., could be interpreted as justification for one or more parties to argue that they could no longer carry out certain obligations.
Over two months since ‘lockdown’ measures were announced by the UK’s Prime Minister, companies and individuals continue to wrestle with this contractual uncertainty without knowledge of how the UK’s ‘new normal’ will work, in practice. For example, on 1 June the UK government approved the return of competitive sport, albeit behind closed doors. Inevitably, this will make event management difficult and have a significant impact on commercial returns and viability of existing contracts for rights holders and service providers – certainly for the remainder of 2020. It is also possible that further lock-down measures or restrictions on events will be introduced at any time.
Enter the concept of Force Majeure, legal jargon that has become widely known during this period, but is still little understood. In simple terms, force majeure is designed to address situations beyond the parties’ control that would make obligations impossible or very difficult to perform, or subject to a delay.
However, unlike some other jurisdictions, under English law, for instance, there is no general implied concept of force majeure. There needs to be express wording contained in the relevant contract to introduce force majeure protections. Even where there is such wording, there are other factors to consider before a force majeure clause can be deemed to apply to a particular situation. The “Force Majeure Flowchart” (available here), produced by the sports team at law firm Charles Russell Speechlys, outlines those factors for parties – together with some other relevant considerations.
For a party seeking to argue that the relevant contract should be terminated because of COVID-19, the absence of a force majeure clause is not necessarily a ‘blocker’. In these circumstances, a party might wish to consider the English common law doctrine of Frustration. This is where an event occurs after the contract has been entered into that makes performance impossible, illegal or radically different from that contemplated by the parties. There are several factors for a party to consider before it seeks to claim a contract has been frustrated. Charles Russell Speechlys’ accompanying “Frustration Flowchart” (available again here) sets these out.