“Force majeure” is a Latin phrase that means “superior force”, often referred to as an “act of god”. It is a somewhat standard clause in commercial contracts that gives the parties a way to deal with unexpected disasters.
Before COVID-19 struck, most event service agreements contained a force majeure provision that addressed handling any “acts of god” in some way, shape, or form. Some force majeure provisions included the occurrence of an epidemic or pandemic in its language, while others detailed a government order or law that made the event impossible or impracticable to be performed.
In the aftermath of cancellations and postponements, we learned the importance of what the understanding of this clause is with each client to help predict the outcome if an “act of god” did occur.
So, what now?
As business begins to slowly pick back up and programs are being scheduled for 2021 and beyond, how do we include a force majeure provision in our contracts when we are still in a pandemic?
What if the disaster contemplated (i.e., COVID-19) is no longer unexpected because it has already occurred, is ongoing, or there is no certainty around when it will ever be fully over?
If a contract was drafted today with the currently drafted force majeure provision, it would most likely not be enforceable if a client attempted to cancel the 2021 program under force majeure due to COVID-19.
This is generally good news for the DMC.
However, if we are aware of it now and can provide that information upfront to the client to avoid any issues later on, that is an ethical, upstanding business practice that all DMCs should employ.
As you draft a contract for a new program, consider asking yourself the following questions:
How far in the future is the event to determine how likely a cancellation would be due to COVID-19?
Is there language specific to navigating a client’s request for postponement?
Have you updated the Force Majeure provision in the contract?
Will you request a waiver of liability specific to COVID-19? Learn more about the waiver of liability.
Should I include an indemnification provision specific to COVID-19? Learn more about the indemnification provision in the DMCC library.
Today’s Tip: Get out in front of the legal issues that can arise and implement sound and transparent business practices by providing language in your event service agreements that address these issues.