What If I Have to Cancel My Event Due to COVID-19?

What If I Have to Cancel My Event Due to COVID-19?

Over the last several weeks—and especially during the previous 48-hours—the COVID-19 coronavirus has disrupted our way of our life. It has caused many businesses and organizations to make the difficult decision whether or not to cancel their events. In some cases, the states are making this decision for them by banning large, non-essential functions in places such as Illinois, California, and New York.

Amid concerns over cancellation fees and other penalties, many business owners are wondering if they can invoke force majeure.  Force majeure is the clause in contracts that stipulates that an event can be canceled without incurring any liability or damages because it is “impossible, illegal or commercially impracticable to hold the event.”

Unless your state’s government has put a ban on the type of event you are planning, most U.S. events are not currently in a situation where force majeure can be invoked. Even if your state or community has declared a state of emergency.  However, there are still things you can do to limit your potential damages:

Read your contracts: Check whether or not your terms and conditions include a force majeure clause or other terms that give you a general right to cancel or reschedule an event. Remember that the burden of proof is on you—you will need to prove that COVID-19 falls within the list of unforeseen items listed in your force majeure clause and that it has impacted performance.

Look at your insurance: If infectious or communicable diseases are not listed as exclusions, your insurance should cover cancellation. In some cases, your insurance may cover a reduction in revenue earned due to lower attendance.  If you do decide to cancel, make sure you provide written notice of a possible claim as soon as possible.

Talk to your vendors: In most cases, they will want to work with you—whether that is giving you more flexible meal options for lower attendance or helping you postpone the event to another date, so you don’t lose your deposit.  Vendors will want to work with you to minimize any impact associated with public health concerns.

Communicate with stakeholders: From attendees to speakers to exhibitors, you need to create a statement regarding the event—whether it will go on or not—that can be sent out to everyone. Also, make sure your communication is clear and concise as you move through the details, especially regarding any refunds or sponsorship fees.  You don’t want anyone to be confused regarding your plans.

Still not sure how to proceed legally?  Give us a call, and we can answer any questions you may have.

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