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COVID-19 and Force Majeure Clauses
The COVID-19 outbreak has wreaked havoc on the entertainment industry. Productions have been halted and distribution channels disrupted, causing a massive shift for both industry insiders and consumers alike. Live events now are being experienced via various streaming platforms as the doors to movie theaters, Broadway houses and concert venues remain shuttered. Unsurprisingly, numerous entertainment contracts have been thrown off course, due to governmental orders prohibiting production activities, to the expiration of unmet payment and to delivery deadlines, cast and crew fears of becoming ill, and the costs inherent in resuming activities in this new environment.
In the midst of this pandemic, one big question for contracting parties is whether force majeure will excuse or postpone a party's obligations without liability. A force majeure, or a so-called "Act of God" clause, generally allows a party to suspend and also terminate a contract without liability if an unforeseen event beyond the party's control makes performance of the party's obligations impossible or impractical. Before the entertainment industry was turned upside down by COVID-19, force majeure clauses were not a primary focus and were likely buried in the boilerplate language, often ignored and rarely negotiated. Now — as actors, writers, producers, directors and production companies alike have found their income streams disrupted and their services deferred by letters invoking force majeure clauses — the entertainment industry is paying much closer attention.
Here are five things to bear in mind about a force majeure provision and its implications:
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