The impact of Coronavirus on weddings has been huge for wedding businesses and couples alike.

This is a completely unique situation that we haven’t experienced before, with many couples facing the reality of having to postpone or even cancel their wedding, so it can be difficult to know how to go about helping your couples while protecting your business.

We asked you to submit all of your legal questions and took them straight to the experts for answers. Read on as William Christopher, Partner at leading UK law firm Kingsley Napley, gives his expert advice on insurance, refunds, postponements, contracts and more…

1. Why are the insurance companies not paying out but telling customers to apply for money back instead?

Most, if not all, insurance policies will contain provisions offering cover in the event of circumstances such as the ones we currently find ourselves in. However, they will also contain clauses to requiring the insured to mitigate their loss. That may mean the insured approaching their suppliers and venues to see whether there is a way to resolve matters without needing to make an insurance claim, by obtaining a refund or rescheduling, for example.

As a starting point, insurers are requiring policy holders to take these steps before making a claim. However, if having made those enquiries, the policy holder is unable to mitigate their loss then the insurer will have to pay out, provided all other requirements of the policy are met.

2. Is there any support available for dealing with non-cooperative insurers?

Not as such. Policy holders should open a channel of communication with their insurer and be persistent. The insurer will be trying to limit the amount they have to pay out as much as possible so adopting a collaborative approach may break through any resistance. An insurance policy is a contract, ultimately the insurer will have to meet its contractual obligations, including paying out if the policy holder is entitled. Be persistent.

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3. What does ‘Force Majeure’ mean and when can it be applied?

‘Force Majeure’ is a contractual term which sets out what will be done in circumstances where a specified event, which usually makes the performance of the contract or part of it difficult or impossible, occurs after the contract is signed. It has to be an express term in the contract. A party to a contract which does not have a Force Majeure clause cannot assert that an event such as COVID-19 is a Force Majeure.

4. What is the legal doctrine of frustration and how does it operate?

Unlike Force Majeure, frustration is not a contractual term. It is a way in which a contract is brought to an end before all obligations have been performed. For an event to be a frustrating one of the following requirements must be present:

  • The event must happen after the contract was formed
  • It must go to root of contract and not have been contemplated by parties at the time of contracting
  • It must not have been either party’s fault, and
  • The event must make the further performance of contract impossible, illegal or radically different from that contemplated by the parties at the time contract was formed.

Where an event meeting the above criteria has occurred the contract will come to an end and the parties will be put back into the position they were in before the contract was formed, i.e. money paid should be returned and the parties will be discharged from any obligations. Suppliers will be entitled to hold back expenses incurred from any money they must return.

Both Force Majeure and frustrating events are complicated and fact specific, if you consider that either has taken place you should obtain legal advice.

5. How does this apply to deposits?

In a non-frustration or Force Majeure scenario, a customer’s entitlement to a refund will depend on the terms of the contract and typically contracts for services will be staged so that the customer becomes entitled to receive less money back as the event gets closer. Contractual provisions will be enforceable as long as they are transparent and fair. Fairness is mainly a question of the contractual terms treating the parties equally.

Also, bear in mind that if the customer is requesting their money back within the first 14 days for forming the contract they will have a statutory entitlement to a refund.

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6. What if our terms and conditions state that payments are non-refundable?

As above, the non-refund term must be fair and transparent to be enforceable. A blanket term which makes all payments non-refundable, in all scenarios, is unlikely to be fair. Likewise, a term which makes a substantial prepayment non-refundable, whatever the circumstances, will usually be unfair and unenforceable, as would a term which excludes a customer’s right to receive back a payment where the contract does not go ahead or where goods / services are not received.

7. Can suppliers or venues force couples to postpone?

The short answer is, “no”. However, if a postponement is offered and a customer declines it then they are likely to have unlawfully terminated the contract. In that scenario they should expect to forgo any money paid under the contract, unless there has been a frustration event.

8. What if the customer has postponed their ceremony to a date I cannot do? Am I liable to refund any money already paid if I am not available?

This is a tricky point. You would need to unpack the circumstances that led to the new date being chosen. A lot will depend on whether you have been consulted.

For example, if you were consulted but were unable to do any of the customer’s new dates then, arguably, the contract has been frustrated because, due to no fault of either party, performance of the contract has become impossible. In that scenario, the contract will have come to an end and you should expect to refund the customer the fees paid, less any expenses or costs incurred.

On the other hand, if the customer has rescheduled without consulting you and, had they have consulted you, a convenient date could have found then, arguably, the contract has not been frustrated because future performance of the contract was still possible. In those circumstances the customer has terminated the contract and any refund would be payable in line with the fair and transparent terms of the contract.

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9. A customer cancelled a wedding booking 24 hours before the event, before the government banned weddings, are they entitled to any refund? I have offered them an alternative date at no additional cost but they now intend to do very small scale wedding and so want refund.

As there has not been a frustrating event – the wedding could have gone ahead – a refund would only be payable if the customer is entitled to one under the terms of the contract.

10. I am offering a no-fee reschedule within 12 months, do I need to extend that time period as a goodwill gesture?

As a starting point 12 months seems reasonable. However, commercially speaking, it may be advisable to be more flexible particularly as wedding events are scheduled years in advance. You will also need to consider the particular circumstances. If no convenient date can be found within the next 12 months but a date after that would work then being inflexible and sticking to 12 months may mean that you are cancelling the contract, which would give rise to a liability to repay any monies received from the customer.

11. If, due to limited availability, a couple have to take a less appealing (and cheaper) date, are they entitled to claim the difference? If they are, is that still the case given that we have postponed their wedding free of charge already?

It depends. The first consideration will be the postponement provisions in the contract, if there are any. In the event that there are none, which will often be the case, the next consideration will be what the restrictions were or will be on the date of the wedding. If the wedding is set for a date when gatherings of the intended size are not permitted then the contract may have been frustrated and therefore come to an end. In those circumstances, discussions relating to the postponement of the wedding will actually be negotiations in relation to a new contract for the hire of your venue on a future date or to amend the terms of the current contract. The customer can expect any money paid to be returned, they will then have to pay for the new booking according to your pricing structure or, practically speaking, the difference would need to be refunded.

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12. Is an email contract by way of an exchange of emails as binding as a signed paper one?

For a contract to be binding the following elements must be present:

  • An offer;
  • Acceptance of the offer;
  • Consideration (i.e., some form of payment);
  • An intention to be legally bound by the contract; and
  • Certainty as to what the parties have agreed.

While most contracts will be formalised in a single document and signed, there is no requirement for a contract to be in that form. An exchange of emails can be sufficient for a contract to be formed, however it can be more difficult to establish what the contractual terms are from an exchange of emails and email exchange may be too ambiguous to offer contractual certainty. This means the ‘contract’ would be unenforceable. It is always preferable to the agreement distilled into a single, legal document.

13. I often do not have the customer’s address though – is it necessary to include that?

It is not necessary to have the customer’s address, however, from a practical standpoint, without their address you may struggle to enforce a contract in the event that you need to do so.

14. What should we be doing now?

It would be sensible for wedding businesses to take this time to plan for events like this happening again in the future. That may mean adding a Force Majeure clause, reviewing terms to make sure that they are clear, fair and balanced or adding postponement provisions.

Although it can be tempting to try and protect yourself whatever happens, that may alienate potential customers and mean that a term is unenforceable. Terms spread risk evenly between you and your customers will be more likely to be enforceable and less likely to put people off.

Nothing said in this Q&A session constitutes legal advice or gives rise to a solicitor/client relationship. Specialist legal advice should be taken in relation to specific circumstances. The contents of today’s Q&A session are for general information purposes only. Whilst we endeavour to ensure that the information given is correct, no warranty, express or implied, is given as to its accuracy and we do not accept any liability for error or omission. If you require legal advice please contact William Christopher on 020 7566 2967 or Katie Allard on 020 3535 1538 or visit Kingsley Napley’s website.