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A Force Majeure Clause Is Good — If You Define the Terms in Future Enrollment Agreements

lesson learned Sep 01, 2020

by Philip E. Goss Jr., Esq.

 

 

There is no question that the pandemic has created great challenges to martial arts schools. On the business side, many students or parents have been reluctant to pay tuition or wish to cancel their enrollment agreement even though factors outside your control have prevented you from providing regular classes. Additionally, if you do not outright own your business premises, there are probably lenders or landlords knocking at your door for rental or mortgage payments. The trickledown is clear: If you do not receive payments for tuition, likely you will be hard-pressed to fulfill your monthly rental/mortgage obligations.

Find a copy of the latest iteration of your student-enrollment agreement and read the fine print. If the term force majeure or act of God is present, you can be sure that the initial drafting of the document was the work of a lawyer. Force majeure is an obscure Latin phrase, now seen in the news as the (generally mistaken) concept that if any extraordinary event, act of God or natural emergency occurs, it will excuse one party’s performance of contractual obligations. In this case, some of your students might seek to invoke it to avoid paying membership dues for the period they did not attend class whether their lack of attendance was voluntary or the result of a temporary closure.

Next, is the phrase accompanied by terms and conditions that define force majeure? Force majeure, in and of itself, is generally a toothless tiger. To be effective, the contractual language must provide examples of what constitutes force majeure, such as a “pandemic or epidemic,” “natural emergency,” “governmental acts or regulations precluding business operations” and so on. Many agreements are drafted without such examples. Failure to include details can be fatal to even a properly drafted force majeure clause.

Courts rarely add terms and conditions to unambiguous contracts. A court will be reluctant to unilaterally define what constitutes “force majeure” without general guidance from the parties in the written agreement.

The final leg on which force majeure rests is that the performance (payment of tuition or attendance when allowed) must be rendered impossible by the event. Inconvenient does not mean impossible.

Therefore, a force majeure or act of God — even if mentioned and defined adequately in the student agreement — will provide slight support for the excusal of tuition payment. In short, the use of force majeure as an excuse to not pay tuition or to cancel an agreement is the longest of longshots.

Additionally, the enrollment agreement must state that no situation in which the school is closed due to public health or other governmental ruling that has jurisdiction over your school or its geographic area, including the issuance of a shutdown or quarantine order requiring your school to cease operations, will excuse payment of all fees and that any missed time due to closure shall be added to the end of the scheduled termination date.

So, if force majeure is so weak, why am I suggesting that you take proactive steps to prevent its use in the future by amending your student-enrollment agreement? Specifically, I’m suggesting that you strip any mention to force majeure or acts of God from future agreements as a preemptive measure. Removing the force majeure arrow from your student’s quiver just makes sense.

If, in the future, students proffer the pandemic (or other now-unanticipated circumstances) as an excuse to terminate the enrollment agreement or to seek payment abatement, you can lead them directly to the error of their ways. Assure them that the time they lose now will be added to the end of their contract — they are not paying for nothing.

Next, I suggest that you review of your lease agreement or mortgage documents. There is no telling what may be included in a document that most assuredly was drafted by legal counsel. Find the force majeure clause that’s likely present and examine the details. Perhaps there will be some unanticipated relief in these documents, which were more likely professionally drafted.

 

To contact attorney Philip E. Goss Jr., send an email [email protected]

 

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