How to Covid-Proof Your Contracts

Most meeting professionals don’t understand what “force majeure” really means, and that creates a lot of confusion during contract disputes — and 2020 was a particularly busy year for those! 

A French term, force majeure literally means “greater force.” When used in a meetings contract, a typical force majeure clause frees both parties from obligation if an unforeseen and uncontrollable event makes it impossible for the gathering to take place. This applies only to the time the meeting is to be held; if it is possible to go forward as planned, it is not a force majeure event. 

The clause includes “acts of God,” but there’s an important distinction to learn: An act of God refers only to naturally occurring events such as hurricanes, while force majeure also encompasses those caused by human intervention, such as terrorist attacks.

I have spent a lot of time explaining to clients why Covid-19 is not a force majeure event. Similarly, 9/11 was not a force majeure event. After 9/11, the only hotel that wasn’t open in New York was the Marriott at the foot of Wall Street; all the other hotels in the city were open. So, it was possible to hold a meeting there.

The airlines shut down on that day, but there were still trains, there were still cars, there were still buses. Technically, it was not a force majeure event, but a little reality came into play. We all knew people were not going travel, and most hotels decided to give everybody a pass. 

The Right Clause

The place to protect against something like the pandemic is in your cancellation clause or a renegotiation clause. What would make it unreasonable to hold your meeting? Make sure your agreement addresses those factors under which you would want to cancel or postpone. 

Here’s a simple rule of law: If it’s not in the contract, you’re not going to get it. If it’s in the contract, you’re going to get it. When I go to court and I say, “We were expecting X, Y and Z,” the judge or the arbitrator will say, “Mr. Howe, show me where it says that in the contract.”  

State your purpose

So often, we see everything in the contract except why we are holding a meeting, but that can be a key reason for cancellation. What’s the purpose of the gathering? What needs to happen in order to fulfill that purpose? Could any requirements related to the pandemic interfere? Outline those circumstances in a frustration-of-purpose clause.

For example, is it important that you have all 300 of your people in the same room? If gathering restrictions or spacing requirements don’t allow for that, could you hold the meeting in several rooms with a video feed for those who aren’t in the main room?

Similarly, if the purpose of your meeting is to introduce a new product, but the product is not available because the plant was shut down for five months, it makes no sense to have the meeting. This really happens to pharmaceutical companies, when they have brand-new drugs to introduce. Maybe the FDA finds reason to delay its approval of the drug. 

Maybe you have a big-name speaker who is very important to the whole theme for your meeting, and the speaker has to cancel. 

What do you have in your contract that will allow you to get out of it if a specific factor upends the very purpose of the event? This should be specified in the frustration-of-purpose clause, which outlines reasons why you might need to postpone and reschedule.

Set a decision date 

We don’t know whether a meeting scheduled for August will be made impossible due to Covid restrictions, because we don’t know what the laws will be at that time. Your crystal ball is as cloudy as mine. 

When is the latest date for you to make a decision on whether the meeting is a go, and you’re ready promote the program online, take reservations and put everything else in motion? By what date would you need to tell your people if it’s a no-go? If that’s 120 days out, don’t you want to have the opportunity at 120 days to pull the plug without liability? Sure you do. That’s the date you need to have in the contract.

Match cancellation clauses

Make sure your clauses that deal with cancellation are uniform across all supplier contracts for your event. The clauses in your hotel contract should have the same terms and conditions as the clauses in the agreement with the guy who’s doing the floral arrangements and the caterer providing your meal. 

This way, if you need to cancel, you can cancel everything across the board. We have seen too many instances where varying cancellation clauses allow the host to cancel one or two suppliers but still be on the hook for others.

Reveal potential risks

As of now, approximately 80 percent of 187 recognized nations in the world are on the Do Not Travel list from the U.S. State Department. If this would compel you to cancel or postpone, specify it in your contract. 

If you’re going ahead with the meeting despite the travel advisory, you have a duty to tell people about the DOS’s recommendation, and tell them why your destination is on that list. Specify any possible risks, which might be high rates of Covid-19, violence in the region or civil unrest.

Don’t rely on waivers

Courts do not like liability waivers, the statements signed by participants saying the individual agrees to assume the risk associated with the activity at hand. In effect, they ask people to give up their right to cast blame, and judges read them very narrowly. 

We’re used to signing these for dangerous activities, but now, planners are requiring all attendees to sign one acknowledging that they understand the risks associated with gathering during a global pandemic. 

If you’re considering having your participants sign waivers, there are things to take into consideration. Where are people from? Laws on what’s enforceable under a waiver vary from state to state. If you are going to use them, it’s still your duty to tell people what they’re getting into, and what trouble they could face. Remember, you’re asking the participant to assume the risk, but the organization still has a responsibility for duty of care.