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The devastating impact of the Covid-19 lockdown restrictions on the hospitality and leisure industry over the past 15 months has been widely publicised.
For the majority of the time since March 2020, weddings have not been allowed to take place at all, or if they have, guests have been limited to a maximum of 15 or 30. This has caused many couples to try to either postpone their weddings or cancel them altogether.
As a result, many wedding venues, as well as suppliers such as caterers, bands, DJs and decorators, have found themselves having to deal with numerous requests from couples wanting to amend the terms of their contracts.
Most contracts contain cancellation terms and, particularly with wedding venues, couples are contractually required to give several months (and sometimes over a year’s) notice if they want to cancel, or they forfeit some or all of the monies they have paid so far (which can sometimes be the entire venue cost).
Due to the rapid changes in lockdown restrictions, couples often simply did not have enough time to cancel their contracts with their venues/suppliers without risking forfeiting the money they’d paid up to that point, and potentially being on the hook for any remainder. This was particularly true for those whose wedding dates were booked for the summer of 2020 or right at the start of the pandemic.
It was therefore inevitable that disputes would occur between couples and their venues and/or suppliers. Many venues were holding out hope that the industry would restart soon and so were reluctant to issue refunds and risk not being able to fill the date. In many cases, they were contractually entitled to retain the money that had already been paid and pursue the couples for anything that was still due.
Then, in September 2020, the Competition & Markets Authority (CMA) released guidance for consumers saying that, in their view, any wedding that could not go ahead due to lockdown restrictions had been “frustrated”. As a result, couples were able to get a refund of any monies paid and would not be liable for any further payments due under the contract.
The law on frustration is very complicated. However, in principle, if an event occurs that is outside of the parties’ control (such as the Covid-19 lockdown restrictions) which renders the performance of the contract either impossible or radically different from what was agreed under the original contract, then the contract is considered to have been frustrated. This means that the contract will come to an end and any monies that have been paid under the contract need to be refunded (less any reasonable deductions).
Many venues circumvented this issue by offering alternative dates to couples. However, disputes arose when couples asked to cancel rather than postpone their weddings.
The CMA guidance is based on what it considers a court is likely to decide. However, the guidance itself is not legally binding. That said, the CMA did take enforcement action in late 2020 against a wedding group that was only offering very limited refunds and has warned that it will take action against any other venues which it considers is not operating a “fair” refund policy.
Now that so-called “Freedom Day” has arrived, all restrictions on the number of guests able to attend events such as weddings and funerals have been lifted, as have the rules on social distancing and the wearing of masks. As such, it is hoped that the wedding industry can start to return to normal and legal issues caused by the Covid-19 pandemic will become a thing of the past.
If you are looking for guidance or advice on contract cancellations due to Covid-19 please contact one of our Dispute Resolution Solicitors on 0161 941 4000 or email The Myerson Solicitors Dispute Resolution Team.