The pandemic and consequent government restrictions on social gatherings have left the wedding industry in disarray. Couples have been forced to reschedule their weddings – in some cases repeatedly – as a result of an ever-changing landscape of lockdowns and prohibitions. This has resulted in countless disputes between couples and suppliers that have been unable to agree on a new date. A great many of these disputes revolve around couples trying to recover deposits paid to suppliers.
On 7 September 2020, the Competition and Markets Authority (CMA) published a statement setting out its view on how the law applies in situations like this. In broad terms, the CMA considered that most wedding contracts affected by restrictions would be frustrated and that couples would therefore be entitled to their deposits back, subject to any reasonable deductions. A recent County Court decision, Spicer and Another v Britton T/A Limelight Films (16 April 2021) (unreported) gives an example of how the courts might approach this issue, and suggests that the CMA might have got it wrong.
Factual background
The claimants had contracted with the defendant for the provision of videography services at their wedding. The contract was entered into in September 2019 for an intended wedding date of 23 May 2020. In mid-March 2020, it became apparent that the parties would be unable to proceed with the original date. They sought to agree a new date but were unable to do so. The claimants wanted a weekend date in May 2021. The defendant was unavailable for that. The claimants were also unwilling to accept the defendant’s offer, in line with the terms of the contract, to send a substitute videographer.
Shortly thereafter the claimants argued that the contract was frustrated. They demanded a full refund of the 20% deposit paid under the contract. The defendant refused, and the claimants, relying primarily on the CMA guidance, commenced proceedings in the County Court to recover this. The CMA guidance recognised, however, that only a court can decide how the law applies in each case. As explained below, the County Court in Spicer took a very different view of the law. There were three main bases for the court’s judgment.
Express allocation of risk
In Spicer, the judge found that the question of frustration should be resolved largely by reference to the express terms of the contract and their impact on the allocation of risk between the parties. Key to the judge’s decision that the contract was not frustrated were the two clauses from the contract in question that are extracted below:
“1… A booking fee in the amount of 20% of the total price secures the date and services of the Videographer for the wedding. The booking fee is non-refundable or transferable in the event of cancellation, it being the agreed loss suffered by the Videographer due to cancellation… Weddings that are postponed to a later date will retain the booking fee as long as the Videographer can reschedule for the new date.
14… The due performance of this contract is subject to alteration or cancellation by either party owing to any cause beyond their control, subject to the terms provided above.”
The judge took the view that, when read in conjunction, these clauses expressly provided for what was to happen to the deposit in the event of cancellation due to an unforeseen event. It was to be held by the videographer to cover his losses. This was to be the case unless the wedding could be postponed to a later date that he could attend. The contract did, therefore, expressly provide for the scenario with which the parties were dealing. As a result, it could not be frustrated by that scenario. The term as to alteration or cancellation went to the performance of the contract as a whole, and not to the treatment of the deposit.
It is also worth noting that any terms as to the allocation of risk must, of course, comply with consumer protection law, notably Section 62 of the Consumer Rights Act 2015. While this issue did not form part of the claimants’ pleaded case in Spicer, if it had been, it would have been a relevant consideration that the deposit which the defendant was seeking to retain was only 20% of the contract’s value (i.e. was a reasonable sum).
The nature of the defendant’s obligation
The nature of the defendant’s obligations under the contract also featured in the judge’s reasoning on frustration. The judge had to consider whether, on a proper construction of the contract, the defendant’s obligation was to provide videography services on the date specified in the booking form, or to provide videography services for the claimants’ wedding on a mutually agreed date.
Under the former construction, performance would have been rendered impossible, as weddings were prohibited on the specified date. That would have militated in favour of a finding of frustration. Under the latter construction, however, performance would be possible as long as the parties could agree on an alternative date. The judge accepted the latter construction. He came to this conclusion for three reasons:
- The date was listed on a booking form appended to the contract as opposed to within the contract itself. It formed part of a list of details for the wedding that also included the wedding’s proposed venue and possible timings.
- As set out above, clause 1 of the contract specifically contemplated and provided for the possibility of postponement and a change of date.
- Time was not made of the essence within the contract. As a result the performance on or by the specified date was not found to be a condition of the contract.
Post contractual conduct and self-induced frustration
In addition to finding that the contract was not frustrated, the judge was also persuaded that the claimants could not in any event have relied upon the doctrine, because of their post-contractual conduct. In particular, the judge held that the claimants’ choice to select a new date that the defendant could not personally accommodate meant that they could not rely on the doctrine of frustration.
The rule that a party cannot rely on self-induced frustration is well established. But two aspects of the decision in this respect, both of which were based on High Court authority, are especially noteworthy:
- Frustration can be self-induced even if the relevant party’s conduct was entirely reasonable and without fault. In this case, the claimants argued that they had chosen the date in question to accommodate the needs of other vendors and contractors. While this may have been reasonable conduct, it still entailed a choice by the claimants.
- Choices made that shut off avenues for performance, notwithstanding the alleged frustrating event, are likely to lead a court to conclude that any alleged frustration was self-induced. The claimant’s decision not to accept a substitute videographer had shut off a potential avenue for the performance of the parties’ respective contractual duties.
Key takeaways
While any measure of real certainty will arrive only if this issue comes before the High Court, what is clear is that parties should be discouraged from placing too much reliance on the CMA guidance. Each case turns on its own particular facts and, in particular, the terms of the relevant contract and the parties’ post-contractual conduct.
Here is a full length article on the Spicer decision.
