Contract Law & COVID-19: Is It Possible to Invoke Superior Force?
by Aimée Riou
Since the beginning of the COVID-19 crisis, now almost a year ago, the art scene has been radically transformed. While the impact on different industries varies, it is still possible to notice more generalized impacts, especially in the context of artists’ contracts. Indeed, the pandemic has led to the cancellation or modification of many of these contracts.
So, how does contract law deal with instances of superior force? What about COVID-19?
Basic Contract Law rules
Before anything else, it is important to understand a few fundamental rules in Québec contract law. First, when a valid contract is formed, it has a binding effect on the parties. In other words, the person to whom an obligation is owed – the creditor – has the right to demand that the obligation be performed in full, properly, and without delay.
After the contract is formed, if a party finds itself in a situation where it is unable to perform its contractual obligation, it may be held liable for the moral or material harm caused to the creditor by this default.
What happens if some great disruption takes place after a contract is formed, radically changing the circumstances of the contract’s performance for one or both parties?
Courts have established that when circumstances change after the formation of a contract, the parties are not freed from their obligations, nor are they obliged to renegotiate, even if the changes in circumstances were not foreseeable.
However, there is an important exception to this principle, which is the concept of superior force.
If the debtor – the party who owes the obligation to the other party – manages to prove that it was unable to perform its obligation because of superior force, it will be freed from its liability.
How can one establish a case of superior force?
In order to show that an event amounts to superior force, this event must be (i) unforeseeable, (ii) irresistible, and (iii) exterior.
In other words, parties forming a contract should not be able to reasonably envision such an event taking place (i). As well, it must be impossible, for any reasonable person placed in the same situation, to avoid the contractual consequences associated with the event (ii). Finally, the debtor must be able to prove that it had no control over the event at all (iii).
Even though the COVID-19 crisis can lead to cases of superior force in relation to artists’ contracts, each case must be analyzed according to its particular facts.
The consequences of the COVID-19 crisis on the entertainment industry have been and remain very important. Some artists (musicians, comedians, visual artists, etc.) already had contracts with broadcasters, producers, and/or other members of the industry, before the pandemic first hit. In those cases, the crisis could effectively be considered to be a case of superior force, since it was a completely unusual and exterior situation, and to which it was impossible to resist (in part because of the governmental measures).
This being said, in the case of contracts formed after the beginning of the pandemic, it is not that simple. Since last March, governmental measures have evolved regularly. In the past few months, there have been some periods during which it was possible to organize shows and other artistic events, sometimes with constraints.
For example, if a contract was formed between the first and the second wave of COVID-19, it is not certain that the measures linked to the second wave would then be considered a superior force. Indeed, scientists have been talking about the possibility of a second wave for a long time now, which entails that the condition of unforeseeability might not be met.
Protecting artists’ rights from COVID-19
It is important to know that the parties can decide themselves which circumstances will constitute a superior force for the purposes of their contract. This could be an interesting option for artists who seek peace of mind regarding the potential repercussions of COVID-19 developments on their careers. For example, the parties who form a contract could explicitly decide that any new state-imposed restrictions preventing or limiting a performance would (or would not) be considered to be a superior force.
In addition, artists who already had contracts with broadcasters before the first or second wave of COVID-19 could still receive compensation, independently from the concept of superior force. Indeed, the Government of Québec announced, last October, that it would provide financial aid for the cultural sector. Notably, the Government has committed to reimbursing 75% of ticket revenues lost because of the public health measures. The broadcasters’ admissibility to this financial aid depends on their capacity to show that the artists of the canceled productions were in fact paid. Thus, broadcasters are encouraged to apply for governmental aid and pay the artists with whom they already have contracts, instead of invoking superior force to free themselves from liability, a method which, as we have seen, is not necessarily bound to succeed.