Step-by-Step Guide to Handling Client Wedding & Event Cancellations due to COVID-19
/Note: At times like this, it’s especially important to remind you that we are not providing individual legal advice. Every situation is going to be VERY fact specific. This is general guidance for planning and informational purposes only. If you need to find a lawyer, we are happy to try and connect you with someone.
At this point, we are starting to see the refund demands roll in. Clients are panicked, upset, and their dream day has been tainted. And unfortunately, they are taking a lot of that out on their vendors.
And despite our best efforts to #postponedontcancel, some clients are pulling the plug and demanding refunds.
So what’s a wedding pro to do?
As someone who likes to PLAN PLAN PLAN, I want to know how to handle worst case scenarios. I research. I prepare my process. And I know a lot of you are like me.
So let’s walk through the eye of the storm together so we can get to the other side already. Here’s how we’ll do it, step by step.
1) Review your Contract.
Before you make any decisions on what you have to refund, you need to READ your CONTRACT.
I’ll be candid here: If you didn’t have a zipped up, locked down, and well drafted contract, you’re really going to struggle with figuring out what gets refunded. I’m seeing a lot of folks with weak non-refundable deposit clauses, poorly drafted force majeure clauses, or badly articulated cancellation policies left grasping at straws when it comes to what is refundable and what is not. And their couples are pushing back, hard.
Figure out where you are in the “lifecycle” of each contract, and determine what TYPE of cancellation your clients are making. Read the clauses of your contract related to 1) force majeure, 2) cancellations, and 3) postponements. See how each one handles funds, and what under circumstances you can keep the nonrefundable retainer, or fees based on work completed, which may be called “pro-rata.” Make a CHART so you can see it (I’m visual, so this is important for me whenever I work on contracts!).
2) Understand that Force Majeure is not a contract killer— it’s a contract modifier.
People are throwing around force majeure like candy at a birthday party. Contrary to popular belief, a force majeure clause does not automatically entitle a party to a refund. Force majeure is meant to excuse or delay performance of a contract without penalty (read more here). It does not automatically “rescind” a contract, i.e. send the parties back to square one, as if it never happened.
This means that if you’ve incurred expenses, if you’ve ordered things you can’t get refunds on, if you’ve done a lot of work for the couple— you’re not necessarily going to be stuck “in the red” because of a force majeure event (that being said, please remember this will depend on your contract language being written correctly/ well).
But it also means that you probably can’t force them to pay you any more money than they already have. Again, that depends heavily on your contract— but if they are bound to “pay in full” during the course of a force majeure event, it’s likely that can get excused or delayed.
Remember: Force majeure is a DEFENSE, not an offensive method of attack. It’s a way to say “you don’t need to do anything else because of these bizarre intervening events we did not consider.” It’s not a “cause of action,” meaning someone can’t sue you for “force majeure.”
We’re also considering “ye merry Old England” law (“common law”) called “impossibility” or “frustration of purpose.” (For some dry info on these, read this article). These types of very narrow construction are also not causes of action. They are defenses to performance. Therefore, think of these in the same boat in regards to what people can sue you for.
I don’t want to give anyone a false sense of security, so I will still say this: a client may be able to claim other causes of action, such as “unjust enrichment,” or “breach of contract (if you are breaching the contract in any way). I expect we will see a lot of these cases. However, “force majeure” in itself is not a cause of action. They can’t say “I’M SUING YOU FOR FORCE MAJEURE!” It doesn’t work that way.
3) Be proactive in communicating, but don’t feel like you must respond within minutes.
Here’s a suggestion that I use EVERY SINGLE DAY: don’t respond to an email immediately. Take an hour.
This is good for a few reasons:
It allows you time to THINK. We are dealing with something you’ve not worked through before. Give yourself a minute to THINK about your answers!
It establishes some boundaries. Clients are freaking out, and we understand that. But you can be supportive without pulling down all barriers that help keep you sane. You still have a life, a family, kids, and your mental health to worry about. An hour delay? That’s going to be understandable.
It gives you time to get out of panic mode. Raise your hand if you’ve ever freaked out about something and later realized it wasn’t as big of a problem as you initially thought? 🙋♀️ Giving yourself time to exit the “fight or flight” response in your animal brain will help you make more calculated decisions with less fear-based response.
4) Need to refund money? It doesn’t have to be all at once!
Ok, we’re getting into the tough part: refunds.
People are panicking and saying “I don’t have $3000 sitting around to refund to them!” and believe me, I get it. I have been there. I know what it’s like to live paycheck-to-paycheck. (I started a small business too, remember?)
Yes, there will be some situations where you may have to pay back unearned fees or fees paid in addition to those your contract says are nonrefundable. That is the reality of business.
But here’s the thing: unless your contract says otherwise, you don’t have to refund the money all at once/ immediately.
Wooooo sah.
Make a payment plan and proactively tell your couples when and how you’ll be paying them back their refundable fees. Express that you’re paying a few folks back, and you’ll need to do it in chunks. Give them a schedule and stick to it. Unless your contract says a specific timeline for repayment, this is going to put you in a stronger position if they decide to take legal action for an “immediate” total refund.
**That being said, I have seen a couple of FM clauses drafted where someone is supposed to refund “within 30 days” for a FM cancellation. If this is you, prioritize those refunds and try to get them out first. Be open with the couple and ask for some grace. So long as you are working to proactively make those payments, you’re going to be in a better position than if you had done nothing at all.’
5) MAX OUT that Refund
Ok, so you’ve got a flat out cancellation where you’ve got to refund money. That sucks. No way around it.
So how do we maximize it?
Yep, you heard me. Let’s turn those lemons into lemonade. Add vodka if you have to. ALL ABOARD THE POSITIVITY TRAIN.🚂
Think three steps ahead. These contract modifications can be used like settlements. And what can we do in settlements? LOTS OF THINGS.
Use your cancellation as a settlement and release, where both you and your client release each other of all other claims, losses, and liabilities under the original contract.
Agree to a flat refund UP FRONT so they can’t come back later and demand more.
Include a confidentiality agreement so they won’t share what you’ve refunded them to anyone else— including other clients of yours.
Include a non-disparagement clause so you both agree not to badmouth the other— head off those threats of bad reviews if they decide they want more money/ are upset at their refund amount.
While these aren’t necessarily enforceable in an upfront service contract, they are most often enforceable in a “back end” or “post-service” contract. MAX OUT THAT CANCELLATION AGREEMENT!
6) GET. ANY. CHANGES. IN. WRITING.
The most important thing: get ANY contractual changes, modifications, or cancellations in writing. Always. One hundred percent of the time. (Need help with wording cancellations or postponements? Got ya covered.)
If anything goes south and ends up in litigation (lawsuits) you don’t want to be relying on “he-said-she-said,” and having it look like you’re breaching your contractual obligations. That puts you in a weaker position.
Your contract with the client may say that “modifications must be in writing” or “modifications must be in writing signed by the Parties.” Depending on that clause, you’ll need to either get things in a writing— email counts!— or in a letter/ written statement signed by you all. Look at your contract to see what it says.
And don’t forget that whomever signed the initial agreement must also sign the modification. You need everyone’s signatures who was on the original contract!!
7) Understand that no one really knows how this will play out, so individual counsel is important.
Even if you do have well-drafted contracts, it’s tough to know exactly how this will all play out. We' haven’t had to deal with pandemics-as-force-majeure/ impossibility/ impracticability in….. well since probably the 1900s, so we don’t have much case law that describes what’s going to happen to service contracts in a pandemic-type situation.
The application of force majeure is an issue of (i) contract interpretation that is (ii) governed by state law. As a result, jurisdictions vary in their treatment of such clauses. If you you and your clients disagree as to whether COVID-19 constitutes a force majeure event and what that means for your contract, it will ultimately be up to a court. However, the majority of courts across the United States will interpret force majeure clauses according to their plain language— e.g. what is plainly written in those clauses.
For this reason, it’s important to talk to a lawyer in your state. A lot of attorneys are doing phone consults for a flat fee. Look for someone who works with small businesses on contract law matters, and who has some civil litigation experience. That ensures they will know not only how contracts work, but how the courts treat these clauses when things go south.
This is a time where it’s really, really important to call a lawyer. You’ll have someone to guide you and play interference if clients get nasty. It’s like having someone there to take the brunt of the drama, anger, and hostility should things come to a head. That’s what lawyers are there for. It’s literally in the job description! We’re happy to try and refer you to someone in our network.
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Hang in there, friends. We’ll keep updating our site as things develop. Until then, keep breathing. We’ve walked through the hurricane, and we are going to make it out the other side. 💖
