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Contracts in the time of coronavirus

Consumer law solicitor Zahra Nanji discusses the impact of coronavirus on contracts and the protection that consumers have in this pandemic.

Posted on 06 May 2020

As the saying goes: love will find a way. Around the world many couples have found innovative ways to marry despite social distancing measures being put in place.

In New York, the Governor Andrew Cuomo made it legal for couples to hold online weddings with guests joining through and technology such as Zoom. However, for thousands of others, the lockdown will mean that they will need to delay or change plans for their Big Day. A survey from wedding planning app Bridebook found that coronavirus will directly impact up to 64 per cent of weddings in 2020 through postponements, cancellations or changes in logistics.
Of course, the impact on contracts for goods and services affected by the Covid-19 pandemic goes well beyond wedding plans. Many people have entered contracts and paid for services from, travel, domestic and childcare arrangements, through to gym memberships and theatre tickets which now, due to the pandemic, can no longer be performed. 
Consumers are asking where that leaves them? After all, coronavirus is something which neither contracting party had envisaged when the contract was formed, but which now prevents performance of the contract through no fault of either party. 
The Consumer Rights Act 2015 (CRA) protects the rights of consumers in England and Wales who have entered into contracts for services and goods after October 2015. However, what happens, in the context of a pandemic, where a contract cannot be carried out? Does the consumer still have to pay? Where a consumer has paid, are they still entitled to a refund? 
Some contracts will have specific clauses that are intended to deal with ‘unforeseen circumstances’, but others may not and there are some general principles of consumer law which are important to bear in mind when thinking through how best to seek a refund. 
  1. The CRA confirms that a trader can not limit or exclude their liabilities under the terms of a contract. 
  2. The remedy you may wish to receive will depend on the nature and extent of the failure. If you did not receive the level of service you paid for, for example, you paid for a wedding dress made with Chinese silk, but instead, due to trading restrictions, you got UK-made polyester, you would have only received part of the service you paid for and the remedy would be a price reduction or refund for loss enjoyment, taking into account the level of service you paid for and what level of service you actually received. 
  3. If the contract was carried out but not with reasonable care and skill:  For example, if the gym at which you are a member offered online circuit classes in lieu of the classes normally provided, but you were not given access to any of the usual training equipment, the remedy could be that the gym would need to repeat the service within a reasonable time, perhaps ensuring the provision of appropriate equipment (medicine ball, dumbbells) to your home and at their own cost, without inconvenience to the gym member; or alternatively the consumer would be entitled to a price reduction on their usual membership fee (up to 100 per cent).
What happens where performance of the contact is impossible? This could be a frustration of contract, the effect of which would ‘kill the contract’ and discharge the parties from liabilities under the contract.  
A frustrated contract could occur as a result of an outside event which occurs without blame or fault of the party who seeks to rely upon it, i.e, a global pandemic. 
In this situation the consumer is entitled to a right to refund, subject to the court’s discretion, to allow the other party to retain or charge expenses they have incurred as a result of entering the contract where it is just to do so.
Many consumers, reviewing paperwork in lockdown, may now have found a clause in their contracts entitled ‘Force Majeure’ which is an unforeseeable circumstance that prevents someone from fulfilling a contract. 
The parties will normally provide a comprehensive list of events likely to qualify as a force majeure event, the consequences attached to the occurrence of such an event and the notice requirements which parties would need to abide by as a result. 
However, although there may be a force majeure clause in a contract, although untested by case law, it may be arguable that the a particular force majeure clause falls foul of the CRA which does not allow exclusion of liability in a contract. 
Remember that purpose of the CRA is to ensure that contracts are carried out in good faith and that there is not an imbalance on rights and obligations which are weighted against the consumer. 
The terms within the contract, including any force majeure clause have to be fair and reasonable: For that reason, if for example, the ‘force majeure’ clause purports to give the service provider an ‘emergency exit’ from the contract with no strings attached, whilst the consumer is not afforded some form of redress – the force majeure clause could arguably constitute an exclusion of liability – contrary to the statutory provisions of the CRA.
Finally, remember, there may be other consumer protections available to you where you paid for services or goods by credit card, if the purchase was for  items or services over £100 but under £30,000.  Paying by credit card can afford protection in the following circumstances: You buy an item that’s faulty or damaged and you can’t get a refund or replacement through the retailer or trader; your item or your service is not provided but you’ve still been charged; the retailer or trader goes out of business before you’ve got your item or service.
It is also worth remembering that while we are in unprecedented times in terms of Covid-19, – and that for many of us the scale of disruption that we are experiencing to our day to day lives is both novel and bewildering, English law is fundamentally precedent based.
That means it has been developed in the context of two world wars, multiple economic depressions, and a number of national emergencies: A statement of that reality is not intended to undermine the novelty of what we are now experiencing, however it may provide us with some confidence that, at least at a contractual level, there are tried and tested legal protections, through statute and common law, that are intended to provide a safety net for the consumer, even when much of what we have come to expect in other arenas now seems to be in freefall. 


Zahra Nanji
Medical devices Medicines

Zahra Nanji

Zahra Nanji is an associate solicitor in the consumer law team.