In a previous post, we discussed whether the COVID-19 pandemic could trigger “force majeure” clauses in contracts and what effects this could have on parties’ rights and obligations.
As we explained, a force majeure clause is included in a contract in case an unforeseen event occurs, making it impossible for one or more parties to carry out their obligations under the contract. This clause is usually contemplated with respect to what are often referred to as “acts of God”, such as earthquakes or hurricanes.
Some force majeure clauses specifically mention epidemics or pandemics in the list of events that could trigger the clause, in which case COVID-19 would certainly qualify as a triggering event. However, some contracts may not be so specific.
In a recent British Columbia case, the court was faced with a situation in which a workshop organizer (the “organizer”) refused to refund a workshop participant (the “participant”) for fees paid after the organizer cancelled the workshop due to COVID-19.
On August 26, 2019, the participant paid the organizer $1,700 to take her photography workshop. The workshop was to be held in Valencia, Spain, from August 2-5, 2020. Due to the ensuing COVID-19 travel restrictions, the organizer cancelled the workshop.
On March 15, 2020, the organizer told the participant that the Spain workshop would be delayed until spring 2021 and offered him the option to attend an online version of the Spain workshop, attend the Spain workshop in person in the spring of 2021, or attend any future workshop. On March 17, 2020, the organizer refunded the participant $510 of the workshop fee.
In a March 18, 2020 email, the participant declined the organizer’s offers and asked for a full refund of the workshop fee, but the organizer declined.
The participant went to court to claim a further refund of $1,190 for the balance of the workshop fee.
The organizer claimed that the workshop was cancelled due to circumstances beyond her control and that the options she gave the participant to reschedule the workshop were more than fair. She asked that the claim be dismissed. Additionally, the organizer stated that she had non-refundable expenses relating to the workshop and that most of the other participants accepted the changes she offered. Finally, the organizer argued that under the signed agreement, she had discretion over how to deal with the cancelled workshop, as the agreement did not promise a full refund in the event of a “force majeure”, she claimed COVID-19 was such an event.
The agreement signed by both parties included cancellation and refund terms. It stated that requests for cancellation up to 120 days prior to departure would be refunded in full, minus a $50 processing fee and a 2.9% Paypal fee. The agreement also stated that workshops could be cancelled in the event of low registration, in which case fees would be refunded in full.
First, the court stated that while the organizer’s expenses were unfortunate, they did not alter the terms of the agreement between herself and the applicant.
Further, the court explained that there was no force majeure clause in the parties’ agreement, and that the organizer could not unilaterally impose terms into the contract without the consent of the participant. The court stated:
“In the absence of a force majeure clause, the existing cancellation terms of the agreement apply, even if unforeseen circumstances prevented [the organizer] from fulfilling her terms of the agreement.”
The court acknowledged thatthe terms of the agreement addressed cancellation due to low registration, which would constitute an event outside of the organizer’s control; however, that was not what happened in this case.
Rather, under the agreement, a full refund was to be provided if a participant cancelled more than 120 days prior to the workshop, which the court found the participant did. Additionally, the court found that because the organizer cancelled the workshop, she was not entitled to keep the processing fee or Paypal fee.
As a result, the court found that the organizer had to refund the participant the remainder of the workshop fee in the amount of $1,190. The court ordered the organizer to pay the participant within 30 days.
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At Baker & Company, we are both everyday trusted advisors and problem solvers. Our team of skilled and experienced litigation lawyers are cherry-picked for their ability to analyze cases, counsel clients, and examine and present evidence at trial. Our litigation team has dealt with all kinds of contract disputes in courts across Ontario and has significant experience at both the trial and appellate levels. Call us at 416-777-0100 or contact us online for a consultation.