What can I do if coronavirus interferes with my wedding plans? Will I lose my deposits with my venue and other contractors?
Coronavirus, or COVID-1, is causing a significant upheaval in our society, forcing people to cancel plans, including weddings, rehearsal dinners and other important events that have been planned for months (or even a year or more) and stay at home under orders from local and state governments. One side effect of these “shelter in place” orders is that it is becoming impossible for some individuals to fulfill contractual obligations and they therefore, risk losing significant money deposits. For example, venues are having to cancel events—such as weddings, parties, conferences, and the like—to avoid hosting many people all in the same place and risk the spread of the virus. Often, one of the parties to such a contract has already paid a deposit to the venue to host such an event. Does the party that made the payment forfeit the deposit? What rights do you have if the other party to a contract is unable to fulfill their end of the bargain after you’ve already paid them?
- Check your contract
First, read your contract. Some contracts contain “force majeure” or “act of God” clauses that provide remedies in the event a contractual obligation becomes impossible to perform because of an extraordinary event. Your contract might provide for a refund or an alternative remedy for the other party to fulfill the obligation. If you’re facing a cancellation or it appears your event cannot occur because of the governmental restrictions arising from the virus, you should check to see if your contract contains one of these provisions.
- Georgia law may provide relief
In the absence of such a provision in a contract, Georgia law can also provide relief. O.C.G.A. § 13-4-21 states that “if performance of the terms of a contract becomes impossible as a result of an act of God, such impossibility shall excuse performance …” In other words, where an extraordinary event beyond the parties control makes the contract impossible to perform, then neither party remains bound by the terms of the contract. Under those circumstances, any deposits paid should be refunded.
- “Non-refundable” deposits could be unenforceable in some circumstances
If a contracting party refuses to return a deposit in the face of a cancellation due to coronavirus on the grounds that it is “non-refundable” under the Contract, you might still be entitled to relief. A contractual provision “that is intended to deter breaches of the contract by imposing a penalty for a breach that is not a reasonable pre-estimation of damages is unenforceable under Georgia law.” Southeastern Land Fund, Inc. v. Real Estate World, Inc., 237 Ga. 227, 230, 227 S.E.2d 340 (1976). This is sort of provision is generally referred to as a liquidated damages clause. While courts will enforce those provisions, they will only do so where the damages arising from a breach of the contract are difficult to discern ahead of time and the liquidated damages amount is intended to be a reasonable pre-estimate of those damages. If your contract lacks language to that effect, you may be entitled to recover your deposit on the basis that it constitutes an unenforceable liquidated damages provision.
- Contact a lawyer at Buckhead Family Law to understand your rights
The state of the law in this area can be both complex and underdeveloped because of how rare “acts of God” are. If you have a question about your rights under a contract and how those rights are affected by the COVID-19 pandemic, it is a good idea to consult with a local attorney. We are happy to sit down with you, review your contract, and discuss your options. Contact us today to schedule a consultation.