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Supplier contracts

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Thousands of wedding and event suppliers from venues to caterers and photographers to music bands are feeling the commercial impact of the COVID-19 Government restrictions. For the foreseeable future, weddings and events are cancelled which has prompted both suppliers and consumers to carefully review their legal position. If you have spent much of the current lockdown managing the consequences of cancelled events, the below questions may assist your business to navigate murky legal waters.

  1. Do you have a force majeure clause in your supplier contract?

Force majeure clauses are contractual clauses which alter the parties’ obligations under the contract when an event occurs which is beyond the control of the parties and prevents one or all of them from fulfilling their contractual obligations. Whether the COVID-19 outbreak will constitute a force majeure very much depends on how the clause is drafted within the contract.

Is the force majeure clause drafted widely enough to cover the pandemic, acts of Government or events or circumstances beyond the parties “reasonable control”?

The COVID-19 pandemic is unprecedented, and it is arguable that the courts will be generous in their interpretation of such clauses when parties have encountered difficulties in performing their contractual obligations.

Wedding or events suppliers seeking to rely on a force majeure clause must also take care in ensuring they comply with any other procedural requirements that may be set out in their contract. For example, there may be a notice clause that dictates how a party is to give property notice and/or require a party to give prompt notification of its intention to rely upon a specific clause.

The usual remedy if a force majeure clause is triggered is for the parties to be excused from their obligations and/or liability under the contract without being in breach of the contract and thereby being liable for damages to the other party.

  1. What if your contract does not contain a force majeure clause?

If your contract does not contain a force majeure clause, it may be possible to rely on the doctrine of Frustration. It is very difficult to demonstrate that a contract has been frustrated. It must be shown that an event, outside the control of either party, has made the contract impossible to perform or has transformed the performance of the obligations under the contract into something radically different from that which the parties intended.

Whilst, each case will turn on their individual facts, case law has shown that contracts have previously been frustrated where there has been a Government ban or lockdown. Where a contract has been frustrated, the parties’ obligations under the contract come to an end.

  1. Is it possible to postpone the event?

The party claiming force majeure is obligated to show that they have taken reasonable steps to avoid the effects of the force majeure event (for example, the event being an act of Government). As a supplier, you may consider alternative methods to avoid cancellations such as postponing the event to a later date, allowing the event to be downscaled to accommodate the current restrictions or providing a virtual means to broadcast the event.

  1. Is a non-refundable deposit non-refundable?

Given the imbalance of negotiating power between suppliers and consumers, the law protects consumers who contract with businesses. Where a contractual term has not been individually negotiated it may be considered an unfair term if it causes a significant imbalance in the rights and obligations to the detriment of the consumer.

An unfair term may include a disproportionately high sum to be paid in compensation in the event of cancellation by a consumer. This may include high deposit which could be regarded as a penalty.

Therefore, where a consumer cancels a booking, irrespective of the contractual terms, your business may not be able to retain all the monies paid by the consumer in advance. However, a supplier is entitled to hold back an amount that has reasonably been incurred to cover its net costs or the net loss of profit resulting directly from the cancellation.

  1. Have you got a reputation protection plan in place?

In a world dominated by social media and online press, damage to reputation has the potential to do more lasting damage compared to a one-off legal claim against your business. With some individuals having access to vast social media audiences combined with the stress of cancelled weddings or events, suppliers serving the wedding and events industry ought to consider what impact their business decisions may have on their reputation. After all, the consequences of cancellation or postponement of an event is more than just financial. Think carefully about drafting your responses to common questions that are likely to be asked by your clients and what steps you intend to take if you are threatened with not only legal action, but a press release ready for circulation.

  1. My supplier contract is very vague, is this a problem?

Times such as these highlight the huge importance of a clear and well drafted contract. Ambiguous terms leave scope for argument and disagreement which can lead to a dispute. Should an application to the court be required, the court will usually resolve any uncertainty or doubt surrounding the term against the party who would benefit from the suggested interpretation.

If your contract is vague or lacking in detail, a court would look at the document as a whole and consider the natural and ordinary meaning of each clause, other relevant provisions of the contract, the overall purpose of the clause and the contract as well as the facts and circumstances known or assumed by the parties at the time of entering into the contract. Court proceedings can be lengthy and costly to both parties and often can be avoided by having a well drafted contract in place.

  1. What are the financial implications for your business?

Cancelled weddings and events are inevitably going to impact your cash flow and the overall financial performance of your business.

The Government are currently offering grants to businesses that are suffering as a result of COVID-19; you may be eligible for assistance and whether this is something worth considering in the short term.

If you are a director of a company it is critical that you are clear on your statutory and fiduciary duties as set out in the Companies Act 2006 when dealing with the cancellation of an event. This is of extreme importance if you believe your business may go insolvent and you are entering the “twilight zone” to avoid any personal liability.

Contact us if you have any queries.

Before we begin, it is important to stress how important it is for you to make sure there is a contract in place between you and your wedding supplier. Irrespective of how well you may know your supplier, a written agreement is crucial as it will ensure both you and your supplier are clear on the obligations that need to be met prior, during and after the big day.

It is advisable to insist on a contract being given to you and to ensure you understand each of the terms before signing it. Once you have signed the contract, make sure you keep all your supplier contracts somewhere safe, so you can refer to it should you need to.

4 important things to look out for before signing a contract:

Contracts will vary depending on who the supplier is. However, here are our recommendations on what to look out for prior to signing a contract:

  1. Length of the contract – contracts vary in length depending on the services being supplied. Whilst there is no general rule as to how long a contract should be, if you are given a contract that is no longer than a page or two, particularly where the value of the contract is considerable (i.e. the price you are paying for the services), carefully check to ensure there is nothing of real importance left out.
  1. When reading the contract, ask yourself the following questions:
  • Are the names of the parties correct?
  • Is the venue(s) and date(s) correct?
  • Has the supplier listed in sufficient detail exactly what services they will be supplying?
  • Is there clear guidance as to what time the supplier should arrive and finish?
  • Does the contract state who will be the point of contact in the provision of the services and if so, what the best contact number is for the point of contact?
  • Has the supplier clearly stated how much the total amount will be for the services? If so, does the price include VAT?
  • Is there clear guidance as to when the deposits and balance of payment is due? Quite often, there will be an option to pay in instalments, if this is the case, are you sure you can pay on the dates provided?
  • Is there guidance as to what the penalties are if the wedding day overruns and doesn’t comply with agreed timings?
  • Is there guidance on what happens in the event of you having to cancel the booking?
  • If your wedding supplier is attending the ceremony or reception, have they stipulated any requirements they may require on the day? E.g. a meal, certain number of rest breaks, accommodation. If so, are you in a position to make provision for this?
  • Is there a provision for what happens in the event of your chosen supplier not being able to attend your event? Can the supplier substitute the services? If so, would the substitution be to someone of the same or higher quality?
  • Is there a requirement that you carry out a wedding insurance in the event of cancellation?
  1. Cancellation issues

There are times when due to unforeseen circumstances wedding days have to be cancelled. A well drafted supply contract should include guidance as to what happens in the event of cancellation and what the financial implications are for both the consumer and supplier. In other words, what refund will you receive if you cancel and what penalty the supplier will pay if they cancel. Quite often, the closer the cancellation is to the date of the wedding, the less of a refund you are likely to receive. Similarly, it is important to be clear on what the supplier will give you if they cancel. Unfortunately some supplier contracts leave fail to mention what will happen in the event of them cancelling, therefore, it is important you check this before signing.

4.    If you are not clear, do not commit

Contracts are there to protect you as a consumer but are also there to protect the business interests of the wedding supplier. Therefore, it is just as important that you are able to meet each of the contractual obligations as it is for your supplier. Before signing the supplier contract, ensure you can meet each of your obligations. If you feel, you need more information or clarity about your obligations, you are encouraged to obtain these first before signing anything. For example, prior to signing a catering contract, you may need to obtain information about the venue (e.g. the kitchen specification or loading points). Ensure you have all the information you need from your other suppliers before you sign the agreement in case you find you are unable to commit.

Should you require any guidance on interpreting or analysing a supplier contract, contact info@theweddinglawyer.co.uk

 

Ladies and Gents, with the wedding season nearly upon us, this can only mean one thing! Happy couples are well into the process of what we like to call “WedMin” or Wedding Admin. Among the many important WedMin tasks include sourcing and securing wedding suppliers in preparation for one of the biggest days of their life. These are exciting times but caution should be adopted before one decides to depart with their hard earned cash.

What is a wedding supplier?

A wedding supplier is anyone providing goods and services for the wedding festivities including the pre wedding day events, the wedding day and the wedding reception. Wedding suppliers may include photographers, videographers, caterers, wedding venue representatives, beauticians, DJs, bands, dress designers, chauffeurs – just to name a few!

Your team of wedding suppliers are essentially the people responsible for ensuring your wedding festivities go according to plan. The number of wedding suppliers entering the industry is growing at a significant rate. Whilst, some suppliers are more established and reputable than others, it is important consumers are diligent before proceeding with making a booking. 

The Wedding Lawyer recommends you follow the following steps before booking a supplier:

Step 1

Complete a full supplier due diligence check

Do not underestimate the importance of completing a full supplier due diligence check. Recommendations to use a particular wedding supplier from friends and family are all very well but there is no substitute to carrying out your own checks for your own piece of mind. It is important that you are equipped with as much information as possible about any supplier who will be providing goods and services at your wedding events. After all, it will be these people who may be interacting with your nears and dears and will ultimately be responsible for ensuring that your wedding day goes according to plan.

Click here to understand how you can carry out your own due diligence checks.

Step 2

Obtain a copy of the supply contract

Ensure you have a thorough understanding of what each clause means in the contract. The number of consumers who choose to sign contracts without fully understanding exactly what they have signed is surprising. Consumers are encouraged not to rush into signing anything until they have fully appreciated what it is that they are signing. A tactic that is sometimes adopted by wedding suppliers is to apply a degree of pressure on consumers to sign a contract within tight time scales with the threat that the consumer may lose their booking. Click here to carry out your own contract review.

The Wedding Lawyer has noticed that consumers overwhelmed with panic and excitement end up contracts that at best they do not fully understand and at worst they completely disagree with.

Step 3

Ensure the scope of the services are clearly set out

Within the body of the contract or a document called the ‘Schedule’ or ‘Particulars’ which is a document usually found at the back of the contract, you should expect to see exactly what services your supplier should be supplying you with. It is important to pay attention to both what is stipulated as well as what isn’t stipulated in the contract. If a contract does not clearly list exactly what is going to be supplied, it is our strong recommendation that you go back to the supplier to ensure this is included. We advise you spend some time carefully going through the services you are being supplied. As well as thinking about what services are being provided, also consider what services are not being provided. This will minimise the chances of any disputes about the provision of the services and prevent any unexpected surprises on your big day.

Step 4

Get to grips with the payment schedule

Ensure you have grasped a thorough understanding of when payment instalments are due. Ensure these are inserted into your diaries as soon as possible. An electronic diary (on your phone or computer) is often useful in this regard. Quite often, setting a reminder a week before the payment deadline is due will assist you in ensuring all steps are taking to have the funds ready for transfer by the day of the deadline. If you can negotiate a final payment to occur after your wedding day, that would be ideal. However, in the event of a supplier not allowing this, try to ensure you can pay as much as possible as close to the big day. Click here to see how to save on your wedding expenditure. 

Step 5

If the price is too good to be true, it probably is!

Weddings are expensive and it is easy to be lured to book a supplier purely based on their price tag. Whilst, this is an important factor to consider when booking a supplier for your big day, it is a common tendency to focus more on the price tag rather than on the ability of a supplier to deliver the services for the big day. An impressive price tag doesn’t always equate to an impressive service. Consumers are advised to make an informed decision before booking a supplier with price being but one of the factor to consider along with the steps listed above.

For more information contact: info@theweddinglawyer.co.uk