Cancelled Events: 5 Things to Know About Refunds

Cancelled events. From personal events like weddings to trade shows, Covid-19 has hit the event industry hard. Cancellations affect event organizers, professional entertainers, marketers and attendees. For some businesses, an annual trade show is where they make most of their sales. Being out the new sales and potentially the deposits on the show can hit a company hard. We’ve heard from clients of all types with questions about how we can help them deal with expected refunds, or fight a refund request. Whatever side of the question you’re on, here are 5 things you need to know.

1. It all comes down to contracts.

As with a lot of payment questions, it may come down to what’s in your contract. This past spring, a lot of sports events were jealous of the Wimbledon organizers. Wimbledon was one of the few events to purchase pandemic insurance (they began that policy after the SARS epidemic of 2002). Having an insurance policy allowed the organizers to refund people’s costs. Their own damages were also limited. Going forward many contracts may include “Pandemic Clauses.” However, for now, you may need to rely on more general contract terms about cancellations. A “Force Majeure” clause is a clause that frees both parties from obligations or liability when there’s a major issue, such as a pandemic.

2. The early bird gets the worm.

If you plan to ask for a refund, you should ask quickly. The pandemic has put many event companies out of business. If a company is bankrupt or closed, they are unlikely to be able to pay you. This is one of the reasons we always advise clients to act on unpaid bills as quickly as possible. Once a debt is 90 days overdue, your chances of recovering money are reduced to 74%.

3. Goodwill may be worth more than money.

If you can afford refunds, you may wish to give them, even if you aren’t obligated to do so. If you can afford to go without a refund from a small business owner, you may wish to do so. One day this pandemic will end and the surviving businesses will remember those who worked with them, not against them. If you cannot provide refunds, consider credits.

4. You want to avoid lawyers.

If at all possible, you want to avoid suing either a company or a client for a refund. There is a backup in the courts right now. You will spend thousands of dollars and months of time pursuing a judgement. As in many bankruptcy cases, getting a judgement is no guarantee that you will actually receive money.

5. A collection agency might be able to help.

If your company is owed money either for event work you were contracted to do or work you performed in preparation for an event, we may be able to help you collect. We may even be able to help on refunds you are due. The more documentation you have about the debt, the better. Please contact us to see if we can help.

I have no doubt that now that we’ve all experienced the disruption that Covid-19 caused, contracts will be written with other potential cancellations in mind. Make sure you carefully read any event contract.

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