UPDATED: 20 AUGUST 2021

What are a business’ obligations where events are forced to be cancelled? And what remedies are available to consumers?

This FYI builds on our previous Covid-19-related updates (including commercial, construction, employment, insurance, tax, finance and corporate M&A updates) and focuses on event cancellations and the law that may apply to such cancellations.  

Does the Consumer Guarantees Act apply?

Contrary to common belief, the Consumer Guarantees Act (CGA) will not apply in the case of cancelled events. In relation to services, such as events, the CGA provides consumers with a guarantee, among others, that a service will be completed within a reasonable time. However, this guarantee does not apply where the time for completion of the service is fixed by contract or otherwise agreed between the parties. In the case of an event, time for completion is usually set in stone via the dates that the event is scheduled to take place over. Hence, although it may seem a gap in the law, this guarantee will not apply to cancelled events.

However, while a consumer will not have the right to a refund specifically under the CGA, there are other avenues that may trigger a right to be refunded.

The position under the contract

As a first port of call, check what promises have been made in terms of refunds, cancellation and postponement. Any representations made to consumers (both within the terms and conditions as well as any other collateral) will need to be honoured. While some terms and conditions will set out clear processes in respect of cancellation and refunds, it is often the case that these situations are not addressed (or not addressed in any great detail). Subject to our comments below, unless the contract expressly relieves an event organiser from performance of the contract (ie providing the event on the agreed date) in certain circumstances, the expectation at law is that either the event will be provided in accordance with the terms of the contract, or at least refunds will be given (to avoid breach of contract).

Force majeure provisions

If the terms and conditions are silent on event cancellations, or they do not cover situations such as Covid-19 or the government response to it, look out for a “force majeure” clause. Event terms and conditions often contain force majeure provisions that allow for the suspension or cancellation of an agreement due to a “force majeure event”. Triggering events are often listed in these clauses, such as fire, flood, epidemics, earthquake, terrorism, labour strikes and acts of God as well as general catch all wording such as “circumstances beyond the reasonable control of the affected party”.

Whether or not performance of contractual obligations (ie providing the event on the agreed date) is excused because of Covid-19 will depend on the wording that is used as well as the reason for which the event is cancelled. If the event is cancelled as a matter of risk mitigation (as opposed to being cancelled as a direct result of the government ban on gatherings or a lockdown), then force majeure wording may not assist. Further, the specific wording of the force majeure clause will require legal consideration. For instance, if “pandemics” are listed as a triggering event, this would now cover Covid-19 given WHO’s declaration of Covid-19 as such. For further information about relying on a force majeure provision, see our previous FYI here.

Recourse under the Contract and Commercial Law Act 2017

Where there is no force majeure provision, the law of frustration may provide further clarity. The provisions of frustration under the Contract and Commercial Law Act 2017 (CCLA) essentially provide that where a contract becomes impossible to perform due to unforeseen events, parties to that contract are discharged from further performance of that contract. If a contract is “frustrated”, the CCLA also provides that money paid under the contract is recoverable and money for expenses incurred is also recoverable. In the context of an event cancellation, consumers would be entitled to a refund for any entry fees paid or tickets purchased. In addition, a court may, if it considers it just to do so, allow the event organiser to retain any expenses incurred. However, we note that there is a high threshold for frustration and establishing that a contract has been frustrated can be difficult (and costly) to prove.

Next Steps

Since the initial outbreak of Covid-19, event organisers have updated their policies and terms to include Coivd-19 specific clauses. Most major ticketing sites now include an information page about Covid-19 which outline the process if an event is cancelled or postponed. In many instances, an automatic refund is issued to ticket-holders in the case of a cancelation due to Covid-19. This move, which fills in the gap in consumer protection laws, promotes consumer confidence when purchasing tickets in times of uncertainty and should benefit the events industry in the long run.

If you would like to further understand how the laws apply to your specific situation, please contact our team to discuss.

Contributors nicole.ashby@simpsongrierson.com