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4 Essential Coronavirus Contract Tips You Probably Don’t Know

There has been a lot of ink spilled over force majeure and cancellation clauses since COVID-19 became a household word. Here are some legal insights that may just save your bacon.

What more could there possibly be to say about force majeure and cancellation clauses in relation to the novel coronavirus now known as COVID-19? Actually, Joshua Grimes, an industry attorney with Grimes Law Offices in Philadelphia, has been fielding multiple calls daily since the virus began and is dealing with the issue from some interesting new angles.

If you’re faced with a situation where you don’t think you will be able to move forward with your event due to travel restrictions, quarantines, or other coronavirus-related restrictions, the first thing to do, says Grimes, is read the contract carefully to see what’s already in it. There may be an out that’s not obvious.

1. If your meeting is being held outside the U.S., look at the laws of the host country. For instance, Grimes said, consider the mega tech trade show Mobile World Congress, which was scheduled to run Feb. 24–27 in Barcelona, Spain, but was cancelled due to the coronavirus outbreak. “Because it was to be held in Barcelona, it falls under Spanish law, and the Spanish civil code has two provisions that are similar to force majeure. These provisions might allow you to cancel or not perform in full, even if you don’t have a force majeure clause in your contract,” he said.

2. If your meeting is in the U.S. but a good number of attendees or exhibitors are from China, EU countries, or other areas that currently can’t fly to the U.S., that may trigger force majeure. While “acts of government regulation” frequently is included in a force majeure clause as a factor making the meeting impracticable or impossible, “it’s not one I’ve heard people invoking up to now,” Grimes said. “If the government has advised against travel to a certain place, that may be a government regulation that could invoke the force majeure clause.”

3. Check to see if your force majeure clause will excuse partial performance. For example, if you want to go forward with your meeting but you anticipate attendance will be at 50 percent, you may be able to invoke force majeure to reduce your room block without liability, said Grimes.

4. Also find out if the disease-related piece of the force majeure clause applies only to the place where the meeting will be held—which is what many hotel-drafted clauses tend to say—or whether it applies when an authority, such as the World Health Organization or the Centers for Disease Control and Prevention, advises against travel. “That would be a better clause,” said Grimes.

Even though COVID-19 is currently excluded from communicable disease insurance, it doesn’t mean you shouldn’t consider event insurance in the future. “The current situation with the coronavirus is proof that new and unanticipated things do happen, and event insurance could cover something in the future that isn’t known today,” said Grimes.

Another reason to buy event insurance? Even without a rational reason, attendees will sometimes cancel when something like a disease outbreak happens. Technically, you may not have to issue a refund, but doing so may cost less in the long run by preserving goodwill and attendance at future shows. As Grimes pointed out, “That’s why you want event cancellation insurance.”

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