Release of performance obligations
Parties may look to release themselves from their obligations if the contracts in question contain a force majeure clause or under the doctrine of frustration.
Force Majeure
A force majeure clause provides that both parties will be released from their obligations under a contract if an act, event or circumstance occurs which is beyond the reasonable control of the parties that makes performance of the contract impossible. However, where such clauses are broadly drafted or unclear, there is a risk of protracted disputes and costly litigation.
The Premier League has contracts with its member clubs to provide the opportunity for those clubs to play in the division. Whether and how the Premier League season resumes seems likely to be a source of consternation. Should the Premier League decide to cancel the remainder of the season due to Covid-19, the likes of Liverpool FC, who currently sit at the top of the table in their bid to win a first League trophy for over 30 years, would want to continue or be awarded the trophy based on their current position. But taking the status quo could also relegate clubs, with considerable financial consequences, without giving them the chance to turn their fortunes around. Stakes are also high for the teams looking for qualification for European competitions.
These clubs may argue that such cancellation or premature determination is a breach of the Premier League’s obligations to its member clubs to facilitate the 2019/20 season. If the contracts between the Premier League and its member clubs contain a force majeure clause, and the definition of force majeure includes references to “disease” or “pandemic”, this may cover Covid-19 as an unforeseen event releasing the Premier League from its obligations.
However, the threshold is high and extremely fact-specific. For example, the Royal Moroccan Football Federation was not able to appeal the fine imposed by the Africa Football Confederation for its refusal to host the Africa Cup of Nations tournament in 2015 due to the Ebola virus, since this was not considered a force majeure event. In this case, performance was considered to be only “difficult”, rather than “impossible”.
Frustration
If there isn’t a force majeure clause in a contract, the common law doctrine of frustration may release parties from their contractual obligations where there is a frustrating event. A frustrating event is one that is unforeseen, not caused by either party, and which renders performance of the contract impossible to fulfil.
Stakeholders may consider whether the Premier League deciding to suspend or cancel the rest of its season is a frustrating event due to the “purpose” of the contract between a member club and the relevant stakeholder no longer being possible. Similarly, clubs that pay rent to landlords or councils for use of their stadiums might argue that the cancellation of the Premier League (being the foundation of the contract) would release the club from its obligation to pay the remainder of the season’s rent.
However, parties should consider their legal position carefully before relying on such arguments. Generally, frustration will not apply where an event is contemplated by a force majeure clause and the doctrine typically applies in only extreme scenarios.