Covid-19: The legal fall-out

  • May 07, 2020
  • Divya Shahani

The sudden and dramatic spread of the coronavirus has brought disruption to every facet of the entertainment industry, up-ending events, travel, production and post-production for almost everyone working in film and TV.

For entertainment lawyers such as myself, this has resulted in a broad range of issues landing on our desks, as producers, distributors, creatives and institutional clients turn to firms such as Miller Thomson to assess their options.

While a variety of problems have emerged from the pandemic, we are seeing three central issues come to the fore:

Force majeure and breach of contract

The first major problem is breach of contract situations, where there may or may not be a ‘force majeure’ clause in place. A force majeure event is basically an unforeseen and extreme circumstance that interrupts, frustrates or prevents the performance of one’s contractual obligations.

We have heard of the ominous expression ‘acts of God’ in this context, but more concrete examples also include a war, natural disaster, riots, strikes, and – you guessed it – a global pandemic. So, such a clause is usually invoked to defend someone’s inability to deliver or perform under a contract due to events out of their control.

Typically, we are seeing both sides of this battle: those wanting to enforce a contract to get what they bargained for, notwithstanding an event of force majeure, and those trying to suspend or terminate a contract due to an event of force majeure. For example, if a producer cannot deliver a film to their distributor or network per the delivery timelines in the agreement due to Covid-19, they may be able to raise a force majeure defence.

The considerations here tend to be whether there is a force majeure clause, and if so, whether that covers Covid-19. You would think that a pandemic would certainly be covered by a force majeure clause, but you would be surprised, as I have seen some that do not.