On March 15, 2020, the Centers for Disease Control and Prevention (CDC) officially recommended the cancellation of weddings in the United States for eight weeks or until mid-May. In some states, this cancellation was extended until June 1st. In addition, most states have limited individual events to less than 10 people or more recently up to 25 people. Some high risk areas have even implemented “stay at home” orders and curfews. As a result, many vendors have urged clients to reschedule their wedding dates to July or even sometime in the Fall due to the uncertainty as to when the pandemic will end.
Typically, contracts for wedding services are standard and use standard language and clauses regarding cancellation. Since venues reserve specific dates and times for couples, they usually require a large deposit or series of deposits leading up to the event. In most cases, these deposits are non-refundable. Matters involving the cancellation or rescheduling of weddings since the pandemic began have been decided on a case by case basis. Clients are at a disadvantage because despite the strict pandemic rules imposed on the nation, in most situations, the deposit or retainers are still non-refundable, although some vendors may be able to work out a partial refund or issue a postponement fee instead of withholding the deposit or retainer.
In other situations, to help relieve liability for contracts that are unable to be fulfilled due to the COVID-19 pandemic, couples may be able to use the following defenses:
(1) Force Majeure
Typically, unexpected events and cancellations are covered by insurance or Force Majeure clauses in the contract. However, pandemics and epidemics are not typically included in Force Majeure clauses or insurance agreements, which relieve parties from their contractual obligations if an extraordinary event prevents one or both parties from performing. To apply the Force Majeure defense, these events must be unforeseeable and unavoidable, and not the result of the defendant’s actions. These clauses are often described as “acts of God.” The problem arises where couples have planned to have their weddings on a specific date and at a specific venue with a certain number of guests because “large gatherings” are not permitted by the State and a pandemic has not necessarily been identified by the courts or the contracting parties as an “Act of God.” Elements impacting the viability of this defense include, but are not limited to: (a) the exact nature of the performance; (b) the location of the performance; (c) the current phase of the epidemic; (d) whether alternative performance is available; and (e) whether the force majeure clause was expressly included or implied in the subject contract (whether the express clause anticipated pandemics/epidemics). In most cases, it is likely that one could argue that the Covid-19 pandemic was unforeseeable and unavoidable and should be protected by a contract’s Force majeure clause. However, the security deposit may likely be withheld in these situations.
Another possible defense is the defense of impossibility or impracticability. In New Jersey, impossibility or impracticability of performance are complete defenses where a fact essential to performance is assumed by the parties but does not exist at the time for performance. This defense could be useful where there is no written contract or Force Majeure clause. Court recognize that a party can be excused from a contractual obligation if performance is “objectively impossible,” unless the risk is assumed by the promisor. Even if a contract does not expressly provide that a party will be relieved of the duty to perform, if an unforeseen condition arises that makes performance impracticable, a court may relieve him of that duty if performance has unexpectedly become impracticable as a result of a supervening event. For couples who have entered into a contract after March 11, when COVID-19 was declared a pandemic, the doctrine of impossibility could be unavailable as a defense because at that point it can be said that the couple assumed the risk that the wedding would have to be cancelled or postponed. Unfortunately, lack of money is usually not good enough to uphold an impossibility or impracticability defense. But there could be relief, where there’s a nationwide lack of funds and government spending.
(3) Frustration of Purpose
New Jersey courts also recognize the Frustration of Purpose defense to contract liability. Although it is a high standard to meet, courts will often apply this defense if it is shown that an unforeseeable event has totally undermined the value of the contract. It is not enough that an unforeseeable event may make performance under a contract either inconvenient or incredibly expensive. Also, the frustration must be so severe that it is not fairly to be regarded as the risks that the party invoking the doctrine assumed under the contract. In other words, the supervening event must fundamentally change the nature of the parties’ overall bargain. Fortunately, a frustration of purpose defense may still provide some relief during the COVID-19 pandemic. For example, frustration of purpose may apply to some service contracts, such as catering contracts. But, it is unlikely that a Governor’s executive order, which for example, limits gatherings of more than ten people, frustrates the purpose of your rental contract because your wedding can still go forward.
(4) Illegality of Contract.
Finally, another defense to non-performance of an existing written contract is the defense that the contract itself is illegal. In other words, a contract which requires a party to perform an illegal act is void and unenforceable as a matter of law. Illegality of a contract may also excuse performance if a change in law renders previously legal performance illegal. During the current pandemic, federal, state and local government entities are adopting laws and issuing orders barring and prohibiting activities that were legal prior to the pandemic such as gatherings of more than a certain number of people, the operation of bars and restaurants and the use of public transportation. Since government entities have been actively enforcing these orders, it is possible that a court will recognize that enforcing a contract that violates these orders is illegal and thus void and unenforceable.
Parties that have wedding contracts that are silent on the issue of a circumstance such as the current pandemic should begin to assess the applicability of the common law defenses for excuse of non-performance as early as possible. It may also be prudent to seek legal advice on the potential legal consequences of non-performance before reaching out to the other party. Also, any parties entering into contracts in the future should consider including a waiver or clause that addresses pandemics.
Sadayah Q. DuRant is a recent graduate of Rutgers School of Law, where she was Editor of the Race and The Law Review Journal. We are pleased to introduce her as a new contributor.