Part II: COVID-19 and the Wedding Industry FAQs: Force Majeure
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 II:
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:
I have been beating around the bush with my biggest point here which is what you all have probably heard the most about. This is a term that we were all familiar with before this happened, but this week, I have a feeling that a lot of you became much more aware of that little clause at the end of a lot of your contracts, especially if you've ever purchased from the Shop.
FORCE MAJEURE PROVISION:
Every contract that I have has this provision and that is the force majeure provision. Force majeure meaning generally act of God. If you go to my newsletter freebies resource, you'll see I included the force majeure provision in there for free that I have in all of my contracts. The example that I typically give to explain what a force majeure provision is this is something completely outside both parties control, an act of God that's usually defined as like, or in case law, that has been argued as something weather related. For example, a hurricane, the tornado in Nashville would be a good example of this.
Let me back up really quickly. This is something that should be in your contract. If it's not in your contract, you should ask your client for permission to make an amendment and add it to the contract. Ask for permission to do that. Make an amendment to add it. You cannot retroactively add it and hope that it stands up, but a force majeure provision means that each party's ability, I'm trying to strip out the legal use of this description, it means that each party's ability to provide the goods, the services, their literal ability to follow through and what they've contracted for service-wise becomes impossible due to whatever that act of God would be.
Again, that could be weather. A lot of times that's been war. We are not technically in a force majeure scenario yet in most states. Now, if I were an attorney in Washington, I'm using Washington as an example because the last time I checked, they have instituted that new rule or the mandate that you can't have gatherings of, what is it, more than 250 people and I believe that Arizona has done the same.
In those scenarios, I would argue that the force majeure provision would apply because if you if the state is not allowing you to actually hold the event that you're contracting for, it becomes impossible for you to provide those services. I think that's pretty logical. However, when it comes to, I'll use my home state of Oklahoma as an example, we don't have any mandates or stipulations preventing us from congregating in large crowds or anything like that, I don't think a force majeure provision would apply or would be able to be upheld as well here because we don't have the state laws and those mandates in place yet.
BRIDE REQUEST TO POSTPONE:
This question has been the most common one I've been receiving and for good reason. I'll read you one question that I got in particular that I think is a really good way to look at this. I've got a question from somebody who said that their clients wedding is in approximately a month from today. The bride reached out and she is considering postponing. She's out of state and the wedding is going to be in a state with multiple confirmed cases. She is considering postponing that wedding because of the Coronavirus. This person said they do not believe that this is a force majeure scenario because they have every reasonable ability to fulfill their obligations to her.
Not to sound like a lawyer or anything, I agree, but I also disagree. Technically, you're correct, because I know that the state that they are from is not in a lock down type of scenario. However, this is a scenario, where this is rapidly evolving. I don't know what will happen and I don't want to sit here and be speculative about what's going to happen. However, we're seeing this spread across the country so rapidly. I think that it's not out of the realm of possibility that in a month, in 30 days, - whenever this wedding is - that the state that this person has this question is from could be in a similar scenario and that force majeure would then kick in and then you could kick in, let's say, even the day before the wedding or something like that.
Then you're up a creek without a paddle because you've waited until the last minute, and now all of a sudden, that can't happen. Now, your client has had a whole month to dwell on this, to stew on this, to be irritated, to be stressed. If that event did have to be canceled, I want you to look at this from the perspective of the business owner: you likely want to rebook this client. You likely want to have this business in the future. I think that you need to look at it from a client relations standpoint. To this person that reached out to me on this scenario, my answer to this is, and how this applies to the rest of you watching, while the force majeure provision may not actually be in effect in your state right now. A. it could be. B. I don't think that you should be looking at it from a force majeure perspective.
I think that you need to be looking at this from a cancellation or termination, again case-by-case perspective. We're not in a countrywide force majeure scenario right now at all. We're not. I started this by saying I'm going to present this whole discussion from the perspective of a litigator and whose case would I choose to represent... If both of those people came to me and asked me to represent them, I'm going to choose whoever I think is probably going to win, right? Whose case would I take? In that scenario, I would probably take the client's case because I would be looking past the force majeure provision.
Because as an attorney, I know that I can't automatically rely on that. I would look past the force majeure provision, assuming that is all that you have been focusing on and I would find other provisions within the contract that would raise the argue of impossibility for the client to perform the contract, etc. I want to drive that point home because, not to be too much of a fear monger, but I'm going to be blunt with you guys, we can't just put our blinders on and just focus on that one provision. Because as a lawyer, I'm going to be looking at that contract as a whole and I'm going to be playing a mental game of Tetris and figuring out how I can make different pieces work for my argument.
I am going to assume that you're solely focused on that argument or on that provision and it's one of those miss the forest for the trees-type scenarios. You're going to hamstring yourself by just focusing on putting all your eggs in that basket, that basket being the force majeure. I hope that makes sense.
That's the point that I really want to drive home to you is we can't just be looking at one provision of our contract.
SUMMER AND FALL POSTPONEMENT:
We want to look at this as a case-by-case, client-by-client scenario. Each client's scenario should be treated differently. If you have a client who, for example, is thinking about postponing their October wedding for next June, you have more negotiating power there in terms of whether or not that postponement should actually apply, and whether or not, you would be willing to transfer that deposit or retainer, however that's phrased in your contract.
If you're like the person that reached out to me for this question and the wedding is 30 days from now, I'm going to take your client's case rather than yours. I apologize for that, but the blunt truth of the matter is I think that there's a level of this where it's inequitable to hold them to that. I think that there are other provisions in your contract that likely could set you up for a scenario of impossibility. Again, my overarching point there is we are not in a complete force majeure scenario yet.
TOTAL FORCE MAJEURE SCENARIO:
While it's great that you're looking at that provision and that's one of the first ones that you should be looking at, that's not the only one that you should be looking at. I don't want you to hang your hat on that. I've been flirting with the concept of what is a total force majeure and that's not a legal term, but what is the total force majeure scenario? Italy. Italy is a force majeure scenario. The government has essentially everybody on lock down.
I read that they may or may not be saying no weddings are allowed to take place right now. I've read that the same is true for funerals. I usually fact check things through a few channels. I have not done that yet. I don't know if that's true. My point there being the government has clearly made that impossible for the clients or for any wedding professional in Italy, it would be impossible for you to continue to have the wedding.
That would be a force majeure scenario where the government has made it impossible for either one or both parties in that scenario to perform according to the services agreed upon within the contract. We're splitting some hairs here, and somewhat, this can be a very complex level of contract law that I'm trying to break down into bite-size pieces, so I hope that that makes sense. The other thing that I wanted to mention when I had that question about the wedding that's 30 days out, I also want to just throw this out there.
BUSINESS OWNER TO BUSINESS OWNER:
This isn't from a legal perspective. This is me speaking business owner to the business owner here. The World Health Organization has named this a pandemic. The NBA has what has postponed their season. Even though those sweeping measures have taken place, even though South by Southwest has been canceled and even though Coachella has been postponed, do you want to be the wedding vendor who says, "Yeah, I don't think that all of those organizations are correct and I think that I'm going to hold you to it"?
I don't think it's wise, and this isn't legal advice. This is just business owner to business owner shooting it straight. I think that it is best policy for you to likely at least consider a postponement. This is rapidly evolving. Everything we're seeing from health officials, which again, I'm not going to refute or argue any of that, I don't know if we have passed the point if it's a bell curve, I don't know if we're over that curve. Does that make sense? If you're talking about a wedding that is somewhat close out like that, I think it's wise to be cautious and to be looking at transferring, transferring those deposits, whatever that you may have in place.