What is the position regarding contracts "cancelled" owing to corona virus?

davidmcn

Manxman_in_exile said:

As I say, I'm not sure of the answer - and maybe the problem is of my own imagining.  It's just that I'm uneasy about the response "The supplier is in breach of contract and must pay a refund".  I'm a bit worried where that leads to in present circumstances.  (And not from a moral point of view - from a pragmatic one).

I suppose an issue here is the lack of transparency. We don't know whether our claim for a refund will be the final straw which will push a business into bankruptcy. It sounds like the government is providing vast amounts of cash to prop up businesses' underlying costs, so which of them need further support from us letting them keep our cash? Some no doubt will, others will have enough in the bank to tide them over.

Manxman_in_exile

unholyangel said:

Well remember consumer contracts are far more forgiving to the buyer than commercial ones. But frustration isn't as restrictive as you think. The foundation of it was taylor v caldwell - where a concert hall burned down. Both parties still existed but the subject matter of the contract did not. Frustration is restrictive, just not in the way you think. For example the two cases around the coronation in the link i posted above. 

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/450440/Unfair_Terms_Main_Guidance.pdf

In particular, 5.9.6, 5.10.3, 5.13.2, 5.16.5, 5.16.6 & 5.27.1. 

Also under the CRA, if goods are involved then they must be delivered as agreed or within 30 days if no other time is agreed. Services must be performed when agreed or within a reasonable time if no time is agreed. 

Ah!  I found one of the coronation cases (Krell v Henry) in my old (1976?) contract law case book - you can tell how desperate I am to find something interesting to do!  What's interesting is that the case summary your link gives only says that the claimant (supplier/provider) failed to sue successfully for the balance of the payment, whereas the summary in my casebook also shows that the defendant successfully counterclaimed for return of the deposit, which is more relevant currently.  (I actually find that quite surprising but I don't suppose the claimant expected to have to pay back the deposit either.  I suspect if he'd been satisfied with the deposit and not tried to sue for the balance, he might have got away with keeping the deposit!).

I'm not disputing what the position under CRA is - I'm just querying how it ought to be applied at the moment.

Also I'm not disputing anything about Unfair Contract Terms.  What I'm querying is whether, under current circumstances, we may end up in a situation where we end up in two years time saying "Oh dear!  Despite what the strict letter of the law said, those businesses should never have had to pay those refunds to everybody under the circumstances.  Look what's happened."

unholyangel

Manxman_in_exile said:

Also I'm not disputing anything about Unfair Contract Terms.  What I'm querying is whether, under current circumstances, we may end up in a situation where we end up in two years time saying "Oh dear!  Despite what the strict letter of the law said, those businesses should never have had to pay those refunds to everybody under the circumstances.  Look what's happened."

Well tbh that is the price of being in business - you get the benefits but you also get the liabilities (unless it's a limited company and then you may be able to escape some of those liabilities!).

Let's just hope it's not long lasting and we find a way out soon. 

Undervalued

NBLondon said:

I am definitely not a lawyer - but what about Acts of God?  Could the virus be included in that?

Doesn't it come down to the T&C?   If the supplier has included a clause along the lines of "if the event is cancelled due to circumstances beyond our control" then that would apply.  Guessing that would often be followed by "liability is limited to refund of any monies paid" or similar.  So you are generally speaking due a refund if the provider cancels - but not any ensuing extra costs.

Pragmatically - for some organisations - refunding all bookings might well push them into liquidation if they have already paid for elements of the event/service and can't get a refund from their suppliers (or now can't use a perishable good)  so the reasonable thing on both sides is to try and agree on a voucher or a re-booking at an undefined future date - provided that voucher can be cashed in if the re-booking is not suitable.

If you want that particular provider to come out the other side and work with them again in 6 months time - maybe you share the risk.   If you don't care about who you deal with in the future - you push your claim to protect your own interest.

Surely if you are religious enough you may take the view that everything is an act of God?

Equally, if you are not religious at all you may take the view that there is no such thing as an act of God.

In the words of the late, great Dave Allen, my your God go with you!

powerful_Rogue

The many companies we have read about on here over the years that have refused to budge on their T&C's despite the consumer having a genuine reason to want to cancel the contract, whether it be falling into unemployment, bereavement etc etc

Now we are asking to show leniency on those very such companies.

Gavin83

I think a lot depends on the value and circumstances as well. I know a few people who use cleaners, home hairdressers etc who are continuing to pay them despite the service not being provided. Seems reasonable to me. However as an example I've had a music festival I was attending cancelled, ticket was £170, should I not claim a refund? It's a lot of money to hand over for nothing in return.

Could easily be worse too. Some people would have saved for years for a wedding which can now not take place. Should they just pay this money anyway and delay their wedding by another 3 or 4 years while they save up again?

unholyangel

Undervalued said:

NBLondon said:

I am definitely not a lawyer - but what about Acts of God?  Could the virus be included in that?

Doesn't it come down to the T&C?   If the supplier has included a clause along the lines of "if the event is cancelled due to circumstances beyond our control" then that would apply.  Guessing that would often be followed by "liability is limited to refund of any monies paid" or similar.  So you are generally speaking due a refund if the provider cancels - but not any ensuing extra costs.

Pragmatically - for some organisations - refunding all bookings might well push them into liquidation if they have already paid for elements of the event/service and can't get a refund from their suppliers (or now can't use a perishable good)  so the reasonable thing on both sides is to try and agree on a voucher or a re-booking at an undefined future date - provided that voucher can be cashed in if the re-booking is not suitable.

If you want that particular provider to come out the other side and work with them again in 6 months time - maybe you share the risk.   If you don't care about who you deal with in the future - you push your claim to protect your own interest.

Surely if you are religious enough you may take the view that everything is an act of God?

Equally, if you are not religious at all you may take the view that there is no such thing as an act of God.

In the words of the late, great Dave Allen, my your God go with you!

Well act of god is really just paraphrasing for a natural event so out of the ordinary, that it would be unreasonable to find someone negligent for failing to guard against it. It doesn't actually mean an act of god. 

But as NBL points out, that only means they're not liable for losses - not that they can retain prepayments or expect payment as agreed when goods/services are not provided as agreed. 

Gavin83 said:

Could easily be worse too. Some people would have saved for years for a wedding which can now not take place. Should they just pay this money anyway and delay their wedding by another 3 or 4 years while they save up again?

Thats a good point about the wedding in particular.

I can see the argument for continuing to pay a cleaner or nanny - because those are more likely to be a contract of employment rather than a contract for services and an employment contract is a different beast. Contracts of employment usually mean the employer have to offer a minimum number of hours per week and can't simply be cancelled, even if the circumstances are outwith your control (it would require redundancy to end the contract). 

Manxman_in_exile

unholyangel said:

Manxman_in_exile said:

Also I'm not disputing anything about Unfair Contract Terms.  What I'm querying is whether, under current circumstances, we may end up in a situation where we end up in two years time saying "Oh dear!  Despite what the strict letter of the law said, those businesses should never have had to pay those refunds to everybody under the circumstances.  Look what's happened."

Well tbh that is the price of being in business - you get the benefits but you also get the liabilities (unless it's a limited company and then you may be able to escape some of those liabilities!).

Let's just hope it's not long lasting and we find a way out soon. 

You seem to be making the assumption that the price of going out of business is a price that is borne only by the business.  Normally that would be the case - but I am concerned that in the current situation, so many businesses are going to have to make refunds when it is impossible to fulfil their contracts, that when they go bust it is likely to have a much wider detrimental effect on the economy as a whole because of the sheer number involved.  I'm not certain that would be in the longer term interests of consumers.

Manxman_in_exile

powerful_Rogue said:

Now we are asking to show leniency on those very such companies.

You misunderstand my point - and why are they the "very such companies"?

As you will see from the post immediately preceding this one, I am concerned that the current situation may produce results that are not in the long term interests of consumers (and the wider economy)

I suspect we are entering a lengthy period of very sustained economic disruption where lots of contracts etc are cancelled as a result of corona virus and where the simple response "Oh well, the supplier is in breach and must refund" may result in an unprecedented number of businesses (and their employees, and the businesses that depend upon those businesses, and the businesses that rely upon those business's employees spending money with them etc etc) going to the wall.

Who's suggesting showing leniency to "them"?  What I'm doing is drawing attention to what I see as a potential problem, and as I've said from the outset, that I don't know what the answer is.

JReacher1

I think they’ll change consumer law to protect companies from being forced to give refunds. 

If current consumer rights are enforced across every business then too many will go bust and it will ruin the economy.  The government will protect them.