The COVID-19 pandemic of 2020 changes many ways in which we work and live. As a result for nonprofit managers, it means revisiting common contract clauses. Likewise, updates ensure cancellations due to infectious disease are covered in force majeure or impossibility clauses.
Contracts Change with the Times
It is common practice to update standard contract provisions from time to time. To this end, most changes are small tweaks. However, when new federal laws come into effect, or major world events take place, the changes are bigger.
One of the last major changes to the force majeure clause occurred after September 11, 2001. With all air flights grounded for several weeks, nonprofit event planners scrambled to cancel or reschedule upcoming meetings and conferences. Most contracts at the time included a force majeure clause. Although, few of these clauses included “curtailment of transportation.” Hence, this was not in the list of events that would make it impossible or impracticable to hold a meeting. After September 11, references to “government travel advisories” and “curtailment of transportation services” are added force majeure provisions.
Similarly, through passing the Americans with Disabilities Act (ADA), contracts now add clauses to define which party — the hotel or the nonprofit association — is liable for making accommodations for disabled persons.
The Post COVID-19 Force Majeure Provision
Now comes the pandemic of 2020. Many nonprofit managers look more closely at the impossibility provisions in contracts. Many find the definition of "acts of god" or “impossibility” do not include infectious disease. Others may find the impossibility clause protects hotels or other vendors. Still, clauses do not refer to the impossibility or impracticability of the nonprofit association continuing to hold the event.
It is a great time to closely look at the force majeure clauses in your contracts. Next, determine how many of the following key requirements are included.
Key Requirements
Impossibility applies equally to the vendor and your organization.
For this purpose, impossibility excuses performance of any event.
It is defined as a cause forcing an event in whole or in part to be “commercially impracticable, illegal or impossible.”
Impossibility includes:
War or threat of war
Terrorist acts or threat of terrorists acts
Acts of domestic or foreign enemies
Civil disorders
Medical epidemics including outbreak of infectious diseases
Government travel advisories
Curtailment of transportation services
Fear for personal safety by attendees
Disasters, fires or earthquakes
Disruption of the electrical power supply causing blackout
Strikes or threat of strike
Nuclear hazard
Considerations
If the impossibility clause in the next contract you look at does not have all or most of the foregoing, consider asking for changes. Furthermore, this improves your organization's protection if you must cancel an event. Even if the force majeure clause lacks these provisions, you can still negotiate a cancellation due to COVID-19. See our blog on negotiating contracts during a crisis for help.