Part I: COVID-19 and the Wedding Industry FAQs
Transcript from Instagram live on March 12, 2020, regarding COVID-19 and the wedding industry
On March 12th, 2020, Paige Hulse hosted an IG Live regarding COVID-19 and the wedding industry. Below, we have transcribed the video for your convenience...
TRANSCRIPT PART I:
DISCLAIMER:
As we get started, one thing that I want to let you know is that while I want this to be as helpful as possible, please know that I am ethically unable to personally respond to your exact scenario and tell you exactly what you should do, but I'm going to do my best to make sure that this is a prudent and productive conversation for all of us because a lot of the questions I've been getting are generally similar. That being said, if we have not met before, my name is Paige Hulse. I'm the owner and lead attorney of The Creative Law Shop®, which is where I house all of my creative law work. Just a brief history of where I came from, I used to be an oil and gas litigator. In that job, I handled primarily contract litigation, which has directly informed how I assist creative business owners and wedding professionals in the realm of contracts. I do have a second and separate law firm, Paige Hulse Law, where I do handle trademark registrations, estate planning, and one-on-one work. Before I begin this conversation, I have to give my standard disclaimer: while I'm an attorney, I'm not your attorney until we sign a client agreement. Everything that I'm speaking about today, I truly hope you find to be helpful - I would not take the time out of my day to provide you with information that is not helpful. While I do hope it is helpful, again it's not advice for your specific business. This is for educational purposes only.
RESOURCES:
My newsletter subscribers know that my team worked very hard for you guys overnight and created a download of our newsletter that I sent out last week, including the contract provisions that I referenced within the letter, for free. You can find it here. If you go to the footer of our website, you'll find just a tab that says newsletter freebies and all of the freebies I ever make are right there. That being said, let's go ahead and dive in. If I'm being completely honest with you all, when I sent out a newsletter about the coronavirus last Friday, there is a small part of me that felt a little bit weird about sending it out because I felt like it could potentially be almost a fear mongering-type perspective. At the time last Friday, this wasn't a pandemic yet, but we knew this was obviously an international concern. It was primarily impacting the US wedding industry by causing delays in shipments, primarily for wedding dress manufacturers and florists. With that being said, I am going to be speaking today primarily about some of the contractual issues that have been arising as of this week and those have to do with cancellation, termination, etc. I'm not here today to talk about my opinion on how this stands as a pandemic; my opinion on this as a health concern; my opinion on the stock market, or any opinion about policies or administrative level.
DISCUSSION:
Legally speaking, this is a rapidly evolving scenario. We know this. We've seen just in the last couple days how this is absolutely blown up across the country. While what I'm saying today is heavily researched. I think on point and I've done everything in my power to make sure that I'm bringing you a talk from a place of integrity and truthfulness. This is a rapidly evolving scenario. I will say this so many times in this conversation, but I promise it is important and that is the only reason why I'm wasting my breath on it. Please, please, please, if you have questions about any particular cancellation scenarios within your business, and if you have clients reaching out to you about whether or not they may cancel, those types of questions, please talk to your attorney. If I am not your attorney and if you are not in the State of Oklahoma, please don't reach out to me, asking for me to give advice on this. Please talk to your attorney in your state. This is going to be a state-by-state issue for a lot of reasons. One because each state has different contract laws. Attorneys cannot practice law when it comes to contracts across state lines. That's a really common misconception. The second reason being in each state, you're seeing states across the country enacting specific state-by-state laws. Every day, it's changing. Like I saw yesterday, I with the state of Washington banning events with more than 250 people present. Many reasons why you need to speak to an attorney in your state about this if you have specific questions. I won't harp on it anymore for the time being, but hopefully, there are no questions around that.
SCENARIO 1: DEPOSITS:
Diving in question number one, I've been getting quite a bit. I'm not going to name names or give specifics about who this is, but I had a question from somebody who has a bride getting married in a state with confirmed cases, multiple confirmed cases within that state and this bride has family coming in from China. This bride is reaching out to whomever this was about a potential cancellation. "What do we do about the deposit?"
As you can imagine, the question about nonrefundable deposits is, I would say the most common question I'm receiving right now. You're going to have to look at your contract. Again, this is where reaching out to an attorney in your state is going to help you answer this question to the best ability for your business. A contract, and part of the reason why I love practicing contract law as silly as that sounds, it is an ever-evolving document and made up of a lot of building blocks. What I mean by that, and what you're going to hear me talk about in this conversation, is that I'm going to approach all of these questions from the perspective as a litigator and whose side would I choose, who would I want to represent, who side do I think I could win with, okay? I think that's a really effective way to look at potential breach of contract scenarios. That being said, you may have a really, really great, absolutely great nonrefundable deposit, retainer, initial payment provision in your contract. It may state explicitly that there are no refunds. However, we have to look at the document in its entirety. This is one of the ways I can poke holes when I'm going in and poking holes in people's contracts. This is one of the ways I can do this. I can look through a contract and I can say, "Yeah, okay, you think you're bound by your payment provision, Section 3D, whatever." I can argue that provision is invalid and I can, therefore, sometimes overturn the contract as a whole. I don't say that to scare you. I just say, let’s not hang our hats solely on the deposit paragraph in your contract. I really want to drive that point home, okay?
ANSWER:
Whoever reached out to me about this: You may very well be able to maintain your nonrefundable deposit. In fact, a lot of contracts I see are written so that that is possible. You may be able to retain that money, but let's also take a step back and think about this as business owners and take a step back and look at this not just from a legal perspective, but I guess we could say a PR perspective. A lot of these clients, especially this scenario, you have a bride getting married in a state with confirmed cases. Her family is coming in from China. Do you really want to perform the work or do you really want to be that person that holds them to the contract and maybe they do follow through because they don't want to waste the money? The worst-case scenario here, but what if, in that scenario, somebody does test positive for the coronavirus and then you're the person that they blame for making everybody congregate there together. Of course, that's an extreme scenario. I don't really like talking in extreme scenarios, but I think you need to look at it from the full perspective like that, from a PR perspective, again taking a step back and just a client care perspective, not necessarily PR, not public-facing. A lot of clients are going to be forced to cancel or postpone their contracts or their weddings. It's horrible. I understand that. It is absolutely horrible. I understand that this is scary as a business owner. I understand this on so many levels.
This is where you have to make a decision as a business owner. If you want to retain that work, you have to decide whether or not you are willing to reschedule with them for a later date. If you want to be the person that holds them to that nonrefundable deposit retainer, initial payment, whatever that may be, that's fine. That could be entirely within your rights to do so but think about it from a business perspective. Would that person then want to come back and book you if they had to reschedule? I think that's something important to keep in mind.
Now, I'm obviously not blind to the fact that you probably already have events booked through the fall. That's where I say it's up to you as a business owner to decide what is best for your business and what you can handle.
WORKSHOPS:
I had a question from somebody who is hosting workshops. I don't know when these are or anything like that. My advice, this is not legal advice but just business owner advice, would be to start looking at ways to make that an online summit and create incentives to participate. I don't think that just because you can't get Plan A doesn't mean you can't plan for Plan B. You need to have that backup plan in place to figure out how to make it virtual if need be. Again, that's not necessarily helpful on a legal level, but that's just my two cents. If people have already purchased tickets for that, that's where you go and look at your terms and conditions of that sale and see what kind of provisions you have to fall back on whether that is a cancellation provision, whether that is some type of amendments provision. We're going to get to all of these in greater detail in a second or whether that is the force majeure provision and that's a big one I'm going to hit on last because that is really the crux of our whole conversation today.
QUESTIONS FROM THE HOW TO FILM WEDDINGS GROUP:
I’ve received really, really good questions from the How to Film Weddings Facebook group. If you are a wedding photographer or videographer, I highly recommend that you join that group. Those two guys have put together a wealth of information over there. A lot of the questions I received had to do along the lines of "What can we do to protect ourselves from cancellations? Two, can we amend a contract to protect us after we have already signed the contract?"
I'm lumping these two questions together because my answer is the same for both. No, you cannot amend the contract to protect you after it is already signed. The stipulation with that is you cannot do that unilaterally. You're bound by the contract. You and your client have both signed it. However, this is where we have to think from a client relation standpoint. I'm not saying that it's impossible to amend the contract. I'm saying that you have to have permission from your client to do so. You have to have permission from your client to do so, so if you want to make that amendment, you have to look at your current contract. You have to look and see what language is specified for amendments and anything like that. Typically, in all of the contracts I write, it requires written notice and written communication, proof that you have both agreed to that. In that case, if the client says, "Yes, please, let's amend the contract in whatever way you're looking to amend it," then you would enter into a new contract. You would have a provision at the beginning that says something along the lines of this agreement, expressly supersedes the original agreement that was signed between the parties on whatever date. Again, that is something where if you're going to do that, I would recommend reaching out to a lawyer in your state to draft that language for you. You can get into some tricky hot water easily in those scenarios. Generally, there is no such thing as a unilateral contract amendment in US law. You could be the one in breach of contract, not your client.
COMPANY-WIDE CANCELLATION POLICIES/ANNOUNCEMENTS:
I've had a lot of people ask if they should create their own coronavirus cancellation policies, company-wide, that would apply to all of their clients, etcetera, etcetera. I would not recommend that at all. Again, this is going to lead me to the force majeure conversation which I'll get to in a moment, right now we're talking about a scenario where we're looking at case-by-case cancellation, postponement, termination-type scenarios. You need to make this decision on an individual client-by-client basis within your company. I do not think that it is wise and I am advising all of my clients who are asking me about this NOT to send out a company-wide cancellation policy. There are a lot of reasons not to do this. One, you could be in breach of contract of your original agreement if you have not entered into any sort of amendment. Even if you're trying to be nice and even if you are trying to extend company-wide, let's say you're trying to return everyone deposits where you're offering a certain postponement of the date, etcetera, that's still something that you need to amend on a client-by-client basis. If you do not follow the proper steps to do that, which is all contractual, you could accidentally wind up in breach of contract while trying to do the right thing and the prudent thing and the beneficial thing for your client. You have to follow the steps properly to execute it properly. A lot of questions, of course, about amendments of contracts in general and like I already said, this can be a tricky area of contract law. I'm not going to get into it because it varies too much case by case.
AMENDMENTS:
If you were overhauling quite a few provisions in your contract, let's say… Situation A is when all of the provisions in the contract are the same, you're just changing the date of the contract or the date of the event I should say, that's not a huge change to the contract. That's not a renegotiation. You don't lose what's in contract law. What we're looking for is the meeting of the minds. From a contractual perspective or from a legal perspective, if you're just changing the date of the event that you're in the contract for, I would still argue that there's a meeting of the minds between the parties, and therefore, I would argue as a litigator that the amendment would stand and that would be valid.
If these cancellations and postponements scenarios are bringing up greater negotiation issues between you and your client, if you all are now having to renegotiate what happens with that deposit, maybe the amount of the deposit, maybe they're asking for an extraordinary date or let's say a change of venue or a change of location of the event itself, just operating as a conservative, litigation-minded attorney, I would advise my clients to enter into a new agreement that supersedes the original one rather than just relying on an amendment. Again, that is because you're really looking for that meeting of the minds between yourself and the client.
I don't know how many other lawyers would recommend that honestly, but as someone who's actually been in the courtroom and argued quite a few contracts before, I want to hedge my bets as much as possible that my client is going to win.
INSURANCE POLICIES:
Next question. I have had a lot of people ask about insurance policies. No offense to any insurance providers that would be listening to this, I'm thankfully not an insurance attorney - never worked in it, never going to, so I cannot advise you at all about insurance.
Each provider's policy is going to differ slightly. I know that this is one of those rapidly evolving scenarios. I think we're going to see a lot of changes, day by day, in terms of how insurance carriers are handling the coronavirus. I'm not really elaborating on that because I don't really want to. I do know that if you are now trying to retroactively go get insurance that that's going to be ... This is now a known condition, so you're going to have a hard time getting an insurance policy that would actually cover you, but you need to go talk to your insurance provider to discuss that.
