The world is currently in a state of emergency as the most recent strain of the coronavirus (COVID-19) continues to spread across the globe at rapid rates.
Countless people are socially isolating and quarantining themselves. Some governments in highly impacted areas – like Italy and Spain – are even banning people from leaving their homes.
Millions are left scrambling to adjust – including retreat leaders.
Postponements and cancellations of upcoming retreats are happening at light speed, leaving retreat leaders between a rock and a hard place.
If you have a retreat coming up, chances are you have a block of rooms, villa or other accommodations locked in courtesy of a contract – and you are now having a hard time following through on it.
Is it possible to cancel your contract and be relieved of your obligations under it given this unforeseen event?
Let’s take a look.
Force Majeure/Act of God Provisions
Many contracts include what’s commonly known as a Force Majeure provision. Latin for “superior force,” this language typically excuses performance by the parties to a contract when unforeseen events beyond their control make following through on the contract impracticable or frustrate the purpose of it in the first place.
Also known as an “Act of God” provision, this clause typically includes natural disasters (like tornados, hurricanes, earthquakes and tsunamis) and catastrophic acts of people (like wars, riots and terrorism).
Some contracts also specifically include pandemic events as Force Majeure events. Given its nature and recent classification as a pandemic by the World Health Organization, COVID-19 is likely considered to be a Force Majeure event.
If Your Contract Has a Force Majeure/Act of God Provision
If you are a party to a contract and it has a Force Majeure provision (look for the words “Force Majeure” or “Act of God” in the contract), there are a few things you’ll want to consider when determining if you can enforce this provision and cancel the contract.
First, in many jurisdictions, the Force Majeure event must be the sole cause of your inability to perform your obligations under the contract. If there are other factors that are contributing to your inability to perform, you very well may not be able to prove the causal link necessary to cancel the contract because of the Force Majeure event.
For example, if you are experiencing health problems now and those – combined with an inability to perform due to the COVID-19 outbreak – are the reasons why you are seeking cancellation of the contract, you may be out of luck.
The specific laws governing your contract are what determine the level of causation required to cancel a contract pursuant to a Force Majeure provision, so make sure you get adequate legal advice about your specific contract and situation.
Second, you are probably required to demonstrate that you have made reasonable efforts to mitigate (a fancy word meaning “limit”) the effects of the Force Majeure event’s impact on your ability to satisfy your contractual obligations.
If there is something reasonable you can do, you must generally show you have done it. What is considered a reasonable mitigation option must be determined on a case by case basis.
Third, you must comply with all notice provisions in your specific contract. Many contracts contain notice provisions that require an affected party under a contract to notify the other party of an intent to cancel in a timely manner.
Of course, what type of notice is required and what is considered timely depends on a few things, including the specific wording of your contract and the laws governing it.
When in doubt, read your contract several times, follow whatever it says regarding giving notice, and keep adequate, date-stamped records of all communications regarding the contract.
If Your Contract Does Not Have a Force Majeure/Act of God Provision
All this being said, not all contracts have Force Majeure provisions. If yours does not, you still may be able to cancel a contract because of a Force Majeure event like COVID-19. There are three legal doctrines recognized in many legal jurisdictions that can possibly help you.
The impracticability doctrine states that a party may seek excusal from performance under a contract if an event outside the party’s control – like COVID-19 – makes performance unfeasible. This is a great option because the standard of unfeasibility is not ridiculously high.
Meanwhile, the frustration of purpose doctrine states that if the essential purpose a contract has been frustrated by an unforeseen event, the parties to a contract may be able to cancel it. This too is a great option because a pandemic – like COVID-19 – is likely to frustrate the purpose of many retreat-related contracts.
Lastly, the impossibility doctrine states that the parties to a contract can void a contract if performance of the contract has been made impossible by an unexpected event. This is the least desirable option because it requires a high threshold – a demonstration of true impossibility to perform. This should be a last resort option.
Cost/Benefit Analysis
As mentioned above, it is important to timely communicate with the other party to the contract and let him or her know of your intention to cancel.
You’ll also want to consider the cost/benefit of potentially having to defend a breach of contract action if the other party disputes your decision. Legal fees can be expensive.
Timing Considerations
Keep in mind too, regardless of whether your contract has a Force Majeure provision or not, your ability to cancel a contract because of an event like COVID-19 is time-sensitive.
Force Majeure events are limited in nature and do not last forever (thank goodness). Once a Force Majeure event has terminated, your ability to cancel a contract because of it (after the fact) will be greatly impacted. Time is a huge factor.
Do not delay in asserting your legal rights, or you may be sorry.
Seeking Legal Advice
If you find yourself in a situation where you are a party to a retreat-related contract and your ability to perform your obligations under that contract are impacted by COVID-19, it is highly recommended that you immediately seek legal advice from a qualified lawyer who is well-versed in the laws governing your particular contract.
This article does not constitute legal advice and is merely intended to educate you on some of the issues COVID-19 presents regarding contractual performance. Laws vary from state to state, country to country. The specific wording of your contract must be carefully considered by a qualified lawyer in evaluating all your legal options, which may include others not discussed in this article.
Need Legal Forms?
Looking for good legal forms for your retreat? We do offer excellent forms that our community uses worldwide. Yes, you should have a local lawyer give it a look-over to make sure they don’t want to add in any local-specific language. However, the main part of the forms themselves are about travel and the issues and dangers of travel and that applies no matter where in the world you are. You can find more information about our retreat legal forms here. Keep in mind that our Retreat Blueprint Program includes these legal forms as a bonus – and it is a better value if you actually purchase the program (since you have the benefit of the course and our coaching) then purchasing the legal forms by themselves.
To your wanderlust life & business,
Melanie Scott, Retreat Blueprint Coach @ Retreat Blueprint Program
As a self-proclaimed retreat-junkie, Melanie knows firsthand the power and transformation of traveling with a group of like-minded people who are ready to dive deep into themselves. It’s pure magic!
Melanie has planned, co-facilitated and attended dozens of retreats all over the world and is beyond excited to help other retreat enthusiasts do the same. As a Retreat Blueprint Business Coach & Copywriter, Melanie specializes in helping retreat peeps crank up their businesses & add sparkle to their offerings so they shine to the cosmos and back.
As someone who owns a yoga retreat centre I feel moved to comment. Yes, retreat leaders may be faced with the disaster of having to cancel a retreat last minute….and students demanding their money back but retreat centres are not generally prepared for this kind of financial loss either. If suddenly a month of bookings are cancelled and all the retreat leaders want their money back, as is the case right now, retreat centre’s may be facing bankruptcy. I think it is fair that everyone be prepared to share in the financial crisis. One student losing the money spent on a luxury holiday could be willing to forfeit the money paid…if this allowed the retreat centre not to have to lay off all of it’s staff and file for bankruptcy.
This is true Vidya. And…. now you are going to rewrite your cancellation policies to be even clearer as to what happens in these kinds of situations!
Nowadays no matter how clear your cancellation policies are, ultimately the client can and will win any dispute of refunds with their credit cards. People know these days a small business cannot compete against chargeback from their credit card. I’ve had multiple customers simply going through their credit card to dispute their charges and winning when they should not and it’s been explicit explained the terms and conditions of bookings. It’s a risk a retreat owner will also have to be aware along with the hard mission that it is to populate a retreat.
Hi Hugo! Actually this is NOT true. We win 85% of all chargebacks in our business. We have strict policies in place and full documentation of it which is why we win.
I signed up for two artist workshops in the UK in May. The organizer lives in US and the artist teaching is in the UK. They are a week each. The organizer finally updated us today of the status of them—postponed until May 2021. So she is not issuing refunds.
As a retreat leader myself, I’m appalled at the handling of it. Most of the attendees are older and many have underlying health issues. I’m 52 but I’m at high risk bc of my medical issues. This really is a cancellation.
Her terms say she has the right to itinerary changes but moving it a year later and not giving us any choice doesn’t seem right.
I pointed out to her that her contract doesn’t address postponement as an option for her and that we should be given a refund.
What do you suggest we do?
Hi Jennifer! Ouch – these are difficult times and difficult situations. It all depends on the cancellation policy. If it says no refunds, then that is the policy. Our cancellation policy for our Vortex event says that if we cancel we give back the money (even though we are rescheduling for next year). The problem is even for us, refunding all the monies is a strain on the business. And for many smaller companies than ours – all the refunds could literally bankrupt them. I think we are all going to have to be patient and do our best to be understanding. My guess is people are going to be MUCH more careful in how they create their cancellation policies in the future!