Your Contractual Rights and Obligations during COVID-19

Due to COVID-19 and the resulting restrictions imposed by the government, several events, such as weddings and conferences, have been cancelled and various venues have been closed. Many are concerned about their agreements - what reliefs they are entitled to, whether their agreements are still valid, can they cancel their agreement.

If you were due to hold an event, can you cancel your agreement?

Check your agreement’s terms

First, check if your agreement includes a right for you to terminate the agreement. If your contract is for a specific period/date and the date has not yet arrived, look for the notice period required in your agreement for termination.

Your agreement may contain further clauses detailing the consequences of termination, including damages, costs and whether any monies paid by you to the other party can be refunded. You should contact your venue and/or vendors to discuss whether you are able to get a refund. Other alternative remedies would include a credit note to postpone your event to a later date.

Doctrine of frustration

Another option you may consider is terminating the contract under the doctrine of frustration. The doctrine of frustration terminates a contract where an event has occurred, through no fault of parties, and results in parties being unable to perform their obligation(s) under the agreement.

However, you should note that the threshold for relying on the doctrine of frustration is high. Some examples where the Courts have accepted that the doctrine of frustration may be applied include a fundamental change in the basis of the agreement such that parties can no longer carry out their obligations, or where an event for a specific date can no longer take place.

If you are a business and your supplier is unable to perform, can you cancel your agreement and change supplier?

If you have not engaged the supplier on an exclusive basis, you may consider changing supplier. However, once your supplier is able to perform its obligations again, if the agreement is still ongoing, you may have to pay your supplier again. You should check your agreement for the terms on the consequences of your supplier being unable to perform. 

In other circumstances (i.e. if you have engaged the supplier on an exclusive basis or ordered goods on a one-time basis), you should check the terms of the agreement on reliefs you are entitled to.

You may also be able to rely on the doctrine of frustration (as explained above).

If you have paid for services in advance and the businesses are closed, can you get a refund?

You should check the terms and conditions of your agreement to see if you can get a refund. You should also speak to the business and see what they can offer.

The business may still be able to supply the services to you after it reopens. If so, the business should take into account the period it was unable to operate and extend the validity period of the pre-payments.

If you do not want to cancel your agreement, what can you do?

You may discuss alternatives with the other party and amend your agreement, if agreeable. If you were due to hold an event, you can also consider reducing the number of attendees. You could also temporarily suspend your agreement with the other party.  

*Before terminating your agreement or taking any further action, you should seek legal advice so that a lawyer may review you agreement and advice you on your rights and liabilities*

This article is for general information purposes only and should not be relied on as legal advice. For specific and up-to-date legal advice regarding your situation please contact a qualified lawyer.