The World Health Organisation has now formally declared a global pandemic, as the coronavirus outbreak continues to spread around the world. Governments are taking drastic measures to stop the spread of the virus, with some parts of the world now in total lockdown. Inevitably, we are seeing a huge impact on sporting events around the world, as organisers are being forced to cancel or postpone events as a result of government action, decisions by their governing bodies, or voluntarily on the grounds of public safety. At the time of writing, just some of the events in this years’ sporting calendar to be affected include:
There is no precedent for organisers of sporting events to follow when trying to deal with their disappointed fans; the UK’s Prime Minister, Boris Johnson, has labelled the pandemic as ‘the worst health crisis in a generation’.
This article looks at what legal rights and obligations organisers of sporting events might have when dealing with the vast number of customers who have purchased tickets, or paid entry fees, for events which have been cancelled, or postponed, and what practical commercial steps they may be advised to take.
What do your t&cs say?
When an individual (a consumer) signs up to take part in an organised sporting event (professional or amateur), or purchases a ticket to watch a game, tournament or other sporting competition, they will have accepted the organiser’s terms and conditions (and if not, the organiser should rectify this ASAP!). These terms and conditions set out the agreement between the organiser and the participant/spectator, basically dealing with the terms on which the participant will compete in the relevant event.
The law on consumer contracts requires they contain certain information, obligations and protections for both parties, including provisions which:
What happens if you need to cancel or postpone your event?
The first place an organiser should look to determine what rights and obligations it has when dealing with its UK customers in the event it cancels, reschedules or postpones an event due to coronavirus is its terms and conditions. Once the relevant provisions (regarding cancellation, and compensation) are identified, they should be double-checked to ensure they are actually enforceable. This is critical, because UK consumers have particular rights under applicable English law in relation to refunds arising from cancellation and postponement.
So can you actually rely on your t&cs?
Unfortunately, the fact that your terms and conditions give you the right to do something doesn’t guarantee you can lawfully do it! Consumer legislation in the UK (primarily the Consumer Rights Act 2015) protects individuals who are acting outside their business, trade or profession from terms which are unfair. Terms which:
Common scenarios we are seeing
Some provisions to particularly look out for in the context of cancelling, rescheduling or postponing events due to coronavirus include:
Provisions permitting the organiser to cancel the event for any reason:
Guidance issued by the UK government on unfair terms (the Guidance) suggests that a term which allows an organiser to cancel an event for any reason at its discretion, without breaching the contract, is likely to be unfair. The term is more likely to be considered fair if the organiser’s right to cancel is limited to certain circumstances which make it impossible or impractical to complete the contract (which are clearly and specifically described). In the context of sporting events and the coronavirus outbreak, such circumstances may include:
Provisions permitting the organiser to reschedule or postpone the event for any reason:
The Guidance expresses concerns with terms which allow a business to fail to meet its obligations under the contract, or suspend its obligations, for any reason. However, a term which enables the organiser to reschedule or postpone an event may be considered fair if:
Provisions permitting the organiser to vary the contract:
If there is no term enabling the organiser to reschedule or postpone the event, or the organiser is concerned this may be unenforceable (see above), the organiser may wish to rely on a provision generally allowing it to varying the contract. A right of variation is at risk of being considered unfair unless it:
Provisions excluding liability for issuing a refund and/or any other costs:
A provision which allows an organiser to cancel or postpone an event is likely to be considered unfair, and unenforceable, if it excludes liability to issue a refund to the consumer. Exactly what constitutes a ‘refund’ will depend on the context of the particular event, and raises interesting questions such as:
It is important to balance a strict interpretation of the law with commercial interests. While the safest, most ‘compliant’ option would be to offer a full refund of all amounts paid, offering more commercially appealing forms of compensation, such as credit notes or free entry to the next event, may be enough to mitigate complaints and to retain customer loyalty. It may also be justifiable to retain booking fees and postage costs.
In many cases, participants/spectators will have booked transport and accommodation and may wish to seek recovery of these costs from the organiser. Unless they booked these ancillary services through the same organiser (in which case the organiser may fall within the Package Travel Regulations and will have strict obligations to the customer which are not covered in this article but are covered in a previous article), it is unlikely the organiser will be liable for these costs. However, it is worth having a clause in the terms and conditions which draws the customer’s attention to this.
In case any provisions are unenforceable, it is important to include a severability clause which ensures the rest of the terms and conditions remain in full force and effect.
One of the most effective ways to mitigate customer complaints, and therefore reduce the risk of key provisions in an organiser’s terms and conditions being scrutinised (and potentially declared unenforceable), is to ensure all provisions are transparent, reasonable and strike a fair balance between the organiser and the customer.
Having fair and transparent T&Cs is key to maintaining customer confidence and trust, and will go a long way to minimising any damage to the organiser’s brand (which is a real risk in these circumstances). Inevitably, many organiser’s T&Cs will be put to the test in the coming months, and it will be important to identify any gaps or problematic areas and ensure these are amended to comply with the law and give the necessary protection going forward.
We advise a wide range of event organisers, venues and rights holders on major professional and amateur sporting events. We would be very happy to have a no obligation initial consultation to discuss any situation being faced at this difficult time. For more information, please contact the author of this article, Alex Cooke (Associate, Fladgate Sports Business Group) or James Earl (Partner, Head of Fladgate Sports Business Group).