Event Sponsorship and the Coronavirus Pandemic

21st Dec 2021

The Covid-19 pandemic has had a significant impact on sponsors’ rights.

Government-imposed restrictions halted large scale events since March 2020, and organisers have had to react to the measures by cancelling or postponing events or significantly adapting events to allow them to take place in the future. This has had a direct impact on current and future sponsorship agreements connected to those events and venues, and led to disputes about the rights and liabities under contracts.

Event cancellation has predominantly been mandatory by law but at times event organisers have felt pressure to cancel or postpone events from governing bodies, local authorities and even participants. A well drafted sponsorship agreement should specify what happens when an event is cancelled or postponed, but many will not have addressed event cancellation or postponement by reason of the coronavirus pandemic.

Our litigation team has acted for a Company faced with a claim in excess of £150,000 arising from the cancellation of events under a sponsorship agreement. Our clients did not want to continue with their sponsorship after the exhibitions had been postponed as a result of the Covid-19 pandemic. Our clients were concerned the new events were not going to be worth the same value for themselves, the venue, and the visitors, and sought to protect their investment from further risks caused by Covid-19.

The sponsorship agreement contained specific provisions for event cancellation and postponement and also included Force Majeure, termination, exclusion, limitation of liability and indemnity clauses. However, the effect of the provisions was unclear in the face of the Covid-19 pandemic.

Following our advice, our clients challenged the claim on the grounds of Force Majeure and Frustration, and that the agreement had effectively been cancelled through the conduct of the exhibitor. Our client successfully resisted the claim for full payment following our analysis of the contract and the law on Force Majeure and the Frustration of contracts.

If you have entered into a sponsorship agreement for an event that has been postponed or cancelled due to Covid-19 or you are considering entering into a sponsorship agreement and are concerned your investment will not be adequately protected from the associated risks of Covid-19 or other reasons, please contact our Commercial Litigation and Dispute Resolution team.