Before You Sign | Contracts, cancellations and COVID-19

17 June 2020 Before

Many of our members have suffered significant financial losses following the Coronavirus pandemic with contracts and events cancelled, and other projects indefinitely postponed.

Last month’s Authors in the Health Crisis follow-up survey saw 41% of authors report that they had had work cancelled by commissioners, with 42% forced to cancel or postpone projects of their own. A large majority (81%) said that they had had planned events and public engagements cancelled following the outbreak.

In this month’s Before You Sign, we look at some contractual issues for authors to consider where they have suffered financially following cancellations of pre-COVID commitments. What follows though is not Coronavirus-specific, and it applies equally to authors who are in the same position at other times, albeit for different reasons.


Before we start

At the outset, it is important to note that an author who considers that a contract has been wrongfully terminated or breached in another way has six years from discovery of the breach to issue a claim in the courts. It is also important to remember that, in all UK jurisdictions, binding contracts do not normally have to be formal written documents, so your rights may be protected even where there is no signed paperwork.

As ever, no two cases are the same, and for practical help about your options, members should contact us and, where appropriate, seek independent legal advice. Before doing so, you should also consult our more detailed COVID-19 Cancellations FAQs.


Can I expect to be paid?

If an author has a binding contract with a publisher or event organiser, the general rule is that the author should expect to be paid on termination of the agreement. If the work can still be published or an event organised within a reasonable period following easing of social distancing measures, the author should expect that agreement to be honoured and to keep any advance paid in the meantime.

The author should also expect to be paid the full fee agreed in good faith at the time, even if this means the contract is more expensive to the other party. This is important for authors to note, particularly as they may feel uneasy about insisting on fees agreed in better economic times.


Does my contract contain a termination clause?

Whether or not an author has a formal legal document, first check what was agreed between the parties about ending the agreement early. Where there is no formal legal document, an author should check what was said in email or text correspondence and double-check any notes of conversations that took place in person or over the phone.

If there are contractual provisions allowing one party to terminate the contract early, any payments relating to notice periods (e.g. x% on y days’ notice) should normally be made. The exceptions to this are where an express termination provision is overridden by a force majeure clause or where, considering all the facts, the contract has become radically different or impossible for a party to perform.


What is a force majeure clause?

A force majeure clause is a contractual obligation that allows a party to avoid or delay delivering its other obligations under that contract where a specified event beyond its control occurs. Parties seeking to rely on such provisions can only usually do so where the clause refers to specific words like ‘disease’, ‘epidemic’ or ‘pandemic’. Vague phrases like ‘acts of God’ will not cover Coronavirus although catch-all phrases like ‘any other law or action taken by a government or public authority’ may do so in certain circumstances. For more on this, consult our COVID-19 Cancellations FAQs and contact our team of advisors.


How else can a contract be set aside?

Even if no force majeure clause applies, a contract may still be held to have been ended automatically if it has been ‘frustrated’. Frustration is an old legal doctrine that is not easy to prove, and a factual approach is taken by the courts.

Broadly speaking, we would expect a party seeking to rely on frustration to show that the agreement was made before the Coronavirus outbreak had gained popular media attention and that performance of its contractual obligations would now be radically different from those first envisaged or impossible (or indeed illegal) to perform following Government restrictions.


What should I do if I haven’t been paid?

The bottom line is that authors should normally expect to be paid under contracts that have not been terminated in accordance with contractual provisions or frustrated. Remember, just because a contract is more costly for a publisher or event organiser to perform, it does not follow that an author should be paid less or nothing at all. For example, a publisher’s refusal or inability to pay royalties to an author on time owing to the outbreak of Coronavirus will be unlawful unless the contract in question expressly permits late payment in such circumstances.


Do cancellations differ from delays?

Yes. Cancellations and delays are not the same. Each outcome must be provided for under contract:

For ‘cancellations’, think ‘termination’. An author should first check to see if an early termination clause exists in the contract and the basis on which it can be triggered. In the absence such a clause, the next port of call for the author would be to check whether any force majeure provision nonetheless allows the other party to terminate the contract early.

Delays are usually dealt with by way of a force majeure clause covering ‘prevention’ or delay. As a rule, authors should not expect to allow a party to indefinitely ‘delay’ in making good on its contractual obligations simply owing to the severity of the current public health crisis.


So, what next?

In most cases, where there is a force majeure event, the party prevented from, or delayed in, the performance of its obligations will be under a separate obligation to notify the author of that prevention or delay. This means that authors should expect to be told the basis on which the work has been prevented or delayed, and when they should expect to be paid.

Once the force majeure event is over, the party affected will also usually be under an obligation to complete its obligations under contract, starting with providing the author with a revised programme for the works that minimises the adverse effects of the prevention or delay. In practical terms, this would be once Government restrictions were such that the work could begin again.


Indefinite ‘delays’

It is also worth bearing in mind that what may, at first glance, be ‘sold’ to an author as a delay may in fact be a cancellation. Where, for example, an author have been engaged under a contract every year and the contracting party seeks to indefinitely ‘delay’ the author’s work by holding it over until the following year, then this is likely to be considered a cancellation, which may not be allowed under the contract in or which may mean following the requirements of a specific early termination clause.


Being realistic

As ever, there will invariably be an element of pragmatism in authors’ relationships with commissioners and event organisers, particularly those with which they have longstanding relationships already, and it is generally a good idea for parties to work towards resolving difficulties amicably.

Authors may, of course, come to agreements with contracting parties at any time, recognising the profound effect of COVID-19 on all sectors of the economy. They should not, however, feel pressured to do so and our team of advisers are on hand to help with these and other questions whenever they occur in the course of an author’s contract.


Before we sign off

We have barely been able to scratch the surface in this blog of what are complex contractual issues. If you have any questions about the tricky points of law points raised in this edition, please get in touch.

Although unable to offer legal advice, we can offer practical guidance based on many years’ experience of vetting our members’ contracts and we can point you in the right direction of other professionals and helpful resources to ensure that you are rights are protected and that you are properly paid for your work.

© 2020 Eddie Reeves

Eddie Reeves is Campaigns and Public Affairs Manager at the Society of Authors, Secretary to the SoA’s Campaigns Sub-Committee and a non-practising Solicitor.