When One Party Does Not Perform

By Nicole Seckman Jilek and Julie M. Ryan

Nebraska businesses continue to require precautions such as mask-wearing, social distancing, and maintaining a high standard of cleanliness and sanitation. As a result, event planners have been wary of holding live events, including weddings, conferences, concerts, sporting events, fund raisers, and more.

However, the administration of COVID-19 vaccinations has begun, and some states have loosened COVID restrictions. You may even be thinking about planning an event in the future. Here are some things to consider when negotiating event contracts in 2021:

Force Majeure Provision. This provision can be used when a party’s performance may become impossible or impracticable due to something it could not have anticipated or controlled when executing the contract. Some courts limit triggering circumstances to those specifically listed in the contract.
The clause should be specific but still include a properly drafted “catch-all” provision. Nebraska courts have not yet decided whether the COVID-19 pandemic can be relied on as a triggering event for a buyer or event “host” to escape duties without liability. It is unknown whether this pandemic is an “unforeseen” roadblock when other pandemics have happened before. Force majeure likely would not excuse non-payment of sums due under a contract, as money can still be easily transferred during a pandemic. Make sure your force majeure language is tailored to your needs for greater protection. Consider whether a force majeure occurrence should let the non-performing party out of the contract altogether or allow that party more time to perform, such as a delay or rescheduling of the event. The provision should also include duties on the party claiming force majeure requiring the provision of timely notice, use of reasonable effort to overcome the effects of the force majeure and keeping the other party updated during the claimed force majeure event.

Law of Impossibility/Impracticability. This refers to the situation when a party cannot perform its duties due to unexpected circumstances that make doing so severely impracticable or impossible. It can apply even if not included in contract terms. Proving a right to this defense can be difficult. For example, a buyer cannot cancel an event contract due to impracticability because event items or services have become inconvenient or more expensive during the pandemic. But if a government stay-at-home order or similar order makes holding an event illegal, this defense would likely apply to protect an event “host” from not holding the buyer’s event. A party relying on this defense would have to show it used “reasonable” efforts to overcome whatever obstacle is at issue.

Law of Frustration of Purpose. Like the law of impossibility/impracticability, this doctrine can apply even when not included in a contract. It applies when a change in circumstances makes the very purpose of the contract frustrated so that the services one party was supposed to perform become worthless to the other party. How a Nebraska court would address this defense in regard to an event contract during a pandemic is still to be seen. These are just a few things to consider before signing an event contract.

For more information, please call 402.392.1250 to speak with Nicole ([email protected]) or Julie ([email protected]).