By Katherine East and Jonathan Dunne
You can also hear us discuss the issues covered here in our latest podcast
At the time of writing, the UK Government has implemented nationwide self-isolation measures across the UK. All gatherings are now prohibited and the public have been ordered to stay at home unless it's essential to leave. The relevant legislation goes as far as to define the limited number of circumstances which will be considered ‘essential’ and any contravention amounts to a criminal offence.
Based on the most recent data from the Office of National Statistics, there were 249,793 recorded marriages in England and Wales in 2016, which was a 1.7% increase on the previous year. Peak wedding season in the UK typically runs from May to September, with the majority of weddings taking place in July and August. Based on this information, it seems entirely plausible that over 26,000 couples could be affected each month of this year’s peak season by a COVID-19 related disruption to their wedding.
Before entering into their marital contract, newly-weds-to-be will have entered into a number of other contractual relationships ahead of their big day, with the most significant (and costly) being the one with their venue. So what happens now, and what are the legal and commercial considerations for both wedding venues and couples facing cancellations or postponements?
On 25 March 2020, the UK Government introduced the Coronavirus Act 2020. At Schedule 22 of that Act, the Secretary of State has a power to prohibit or otherwise restrict events or gatherings in the UK by public declaration. On 26 March 2020, the Secretary of State introduced the Health Protection (Coronavirus, Restrictions) (England) Regulations 2020. Section 7 restricts gatherings of more than two people in a public place, except:
- Members of the same household
- Gatherings essential for work
- To attend a funeral
- Where reasonably necessary in certain other situations, such as to provide care or emergency assistance.
The Government also published a list of businesses which had to immediately close, including all places of worship, hotels, museums, restaurants, public houses and other food and drink establishments.
So what does this mean for weddings? Well, if a contract cannot be performed because the performance has become illegal through an Act of Parliament or other legislation, the contract will be void. This means for the majority of weddings falling within the closure period implemented by the Government, performance will not be possible and the venue will likely be required to provide a refund or alternative date to the couple. The venue would then have to seek to claim for any losses incurred from its insurance provider.
The Regulations came into force at 1pm on 26 March 2020 and require a review every 21 days. On 16 April 2020, the UK Government extended lockdown measures for a further three weeks. The Regulations will be of only limited assistance to venues or couples with weddings scheduled after 7 May 2020. Whilst both venues and couples will be keen to discuss the logistics of postponement with staff, caterers, bakers, dress fitters, photographers, florists and other suppliers, this may not be possible if the wedding is set for a date after 7 May 2020.
It may simply be a case that the parties agree to sit and wait, until further guidance is provided by the UK Government. Parties may also choose to agree to a final future decision date, based on any minimum notice requirement with suppliers or insurers.
Force majeure clauses are often included in contracts to relieve parties of their obligations on certain specified events, such as acts of God or government action. Force majeure is not a doctrine which is implied by law, but is instead a creation of contract. Interpretation will therefore turn entirely on the wording of the contract and, as these clauses are drafted by the parties, they vary greatly in scope and effect. We've written more detail on force majeure clauses. It should be noted that the Courts will not imply terms into a force majeure clause and are reluctant to widen the scope of them beyond that which is specifically drafted.
A likely consideration will be whether such clauses are to be relied upon by the couple or the venue. Is it, “my wedding is affected by an unforeseen event making it impossible for us to attend”, or “we as a venue are affected by acts outside of our reasonable control and therefore we cannot host you”? Who seeks to rely on the force majeure clause will be relevant for both parties if they are seeking to recover any sums lost from their insurance provider. Both venues and couples should therefore think carefully before taking any action and are encouraged to have the terms of their contracts reviewed by legal advisors before seeking to invoke a force majeure clause.
No doubt, being faced with a cancelled wedding will be more than merely frustrating but, in law, ‘frustration’ is defined very narrowly and will usually only apply in cases where the contract has become impossible to perform, either legally or practically. Simply becoming ‘too expensive’ is not sufficient for frustration to apply.
In practice, a claim of frustration is ultimately determined by the court on the individual facts of the case and it will often be difficult to prove that an obligation has truly become ‘impossible’ to perform. Courts have traditionally taken a strict approach to parties seeking to escape the terms of what would ordinarily be a legally binding contract.
In addition, the effect of successfully pleading frustration is that the contract is terminated immediately. This could initially be appealing to couples or venues seeking to escape liability for funding or hosting a wedding, but is it truly the outcome the parties’ desire? Couples who have spent months choosing a venue may simply want to choose another date, rather than completely terminate the contract, and venues who have spent hard-earned profits advertising and attracting couples may not wish to terminate a secured contract.
In such a complex area of law, and in these unprecedented circumstances, both venues and couples are encouraged seek legal advice on their individual cases before taking any action or seeking to assert that a contract has become frustrated.
Wedding venues (and other suppliers) commonly contract with couples directly and, as such, will be subject to the provisions and implied terms in the Consumer Rights Act 2015 (“CRA”) which applies to all contracts for the provision of goods and/or services by businesses to consumers. The terms of the CRA cannot be excluded by contract, will apply irrespective of the terms of the contract and, in some cases, in direct contradiction of a contract’s terms.
The implied terms under the CRA include that services (for example, the catering of a wedding) must be provided within a reasonable timeframe, unless the contract itself sets a timeframe, in which case that timeframe must be complied with. How these provisions will apply to weddings in the face of Covid-19 is a question for the courts, but venues should be alive to the possibility that, if these implied terms cannot be complied with, e.g. if the wedding venue is forced to close by the Government, then the couple may have a statutory right to require the venue to repeat the performance of the contract (i.e. by agreeing to re-schedule the wedding for a different date) or to require the venue to provide a partial or full refund in respect of the parts of the contract which cannot be fulfilled as promised. This could include a partial refund if the re-scheduled date is on weekday rather than a Saturday as originally scheduled, or in the off-peak wedding season rather than the summer months. For more detailed guidance on cancellation, please see our further guidance.
The CRA also requires that certain terms in business to consumer contracts are fair and transparent; otherwise they may not be binding on the consumer. A term will be considered to be unfair if it causes significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer. Whether a term is unfair will therefore be a matter for the Court to determine, having made reference to the wording of the contract and also the individual facts of the case. Venues should be alive to the potential that attempting to withhold a couples’ deposit following the cancellation of a wedding in the face of the Covid-19 may fall foul of this test in circumstances where the venue may be able to mitigate its losses (i.e. by not ordering food and furloughing any staff) and also recover the sums lost from its insurer.
Whilst the parties are encouraged to look to the terms of the contract between them, as well the other terms and doctrines implied by law, the commercial reputation of the venue is also a vital consideration. At a time when the whole world is looking for acts of kindness and for businesses and individuals to act reasonably, the potential for reputational damage is high. Venues adopting a hard line approach could well find themselves under criticism from customers and, as we all know, one positive review may reach three people, but one negative review could reach tens, if not more.
The costs associated with taking disputes to court are also high, both in terms of money and management time, and it is always advisable to seek to negotiate a compromise which is acceptable to both parties before resorting to costly litigation. Both venues and couples will be facing difficult decisions and venues must, of course, be mindful of the financial implications of losing revenue by allowing weekend rollovers into 2021, but there is always a balance to be struck and businesses may be able to take some comfort or relief from the Government’s financial intervention measures which have been announced.
It is vital that the parties do not take any action before consulting with their insurance providers, or they risk invalidating the terms of the policy.
Venues may be able to recover financial losses resulting from cancelled bookings and their policies may also provide for business interruption payments. Similarly, if the couple obtained wedding insurance, they may be able to claim any rearrangement costs charged by the venue or suppliers.
Insurance policies are contractual documents and will fall on the terms drafted. Insurance providers are likely to have different policies relating to cancellations owing to sickness, viral outbreak or government intervention and whether the current circumstances will qualify for a claim will depend on the individual wording of each policy.
We’ve heard it time and time again, but we really are operating in unprecedented times. There is a rocky road ahead for both wedding venues and couples intending to wed over the remainder of 2020. Once matters are already in dispute, costs will escalate. The earlier you can seek to negotiate and agree a position, the less disruptive it will be for both parties in terms of time, cost and also stress.