As January winds down, we’d like to reintroduce you to photographer and blogger, Angie Webb.
As you can tell by her work, Angie is one of the most talented photographers in the Atlanta metropolitan area. We recently had the pleasure of meeting with her to discuss some legal questions which her followers may be having. (Note: You can learn more about Angie and her blog at https://angie-webb.com/)
Legal question which Angie’s readers may benefit from: “Because of the pandemic, clients sometimes need to cancel a photoshoot after a photographer has paid for things like studio space. How might a photographer protect himself from lost investments in the event that a contract is not honored?”
Brief Answer: Outside of what’s found in the specific terms of the contract itself, Georgia provides limited relief to enforce contractual obligations due to unanticipated COVID-19-related cancellations. The right to enforce contractual obligations will likely depend on the language (i.e., the terms) of the contract itself so drafting a thoughtful contract is a good idea.
A. Background
“A contract is an agreement between two or more people [or entities] for the doing or not doing of some specified thing.” For there to be a contract there must be a mutual agreement between both parties, there must be an offer, there must be acceptance, and consideration.
The COVID-19 Pandemic has prevented many people and businesses from fulfilling contractual obligations.
Further, if a contract is breached, Georgia recognizes many common law defenses, which include: (1) impracticability, (2) impossibility, and (3) frustration of purpose. In the instance of unforeseen circumstances, “force majeure” clauses in the agreement would rule.
NOTE: The phrase “force majeure” hasn’t been examined much by courts in Georgia (e.g., there are only six published court opinions discussing the phrase “force majeure”). On the other hand, courts in New York, Texas, and Louisiana have discussed the phrase “force majeure” about twenty times more frequently than courts in our state. Still, whether you call it a “force majeure” clause or something else, the principle is still the same: If you require reimbursement irrespective of the reason for cancelation (i.e., an unconditional obligation to reimburse)—and such is in the written contract and all parties understand that the photographer must be reimbursed—Georgia courts may allow a photographer to recover his loses if an “act of God” causes a person to have to cancel the contract.
However, as you’ll see below, an attorney’s advocacy may still be necessary. The reason: The court will likely need to decide whether the “impossibility” defense will allow the other party to avoid reimbursing you or whether the other party has made an enforceable unconditional promise to reimburse you.
B. The “Impossibility” Defense
In Georgia, “[i]mpossible, immoral, and illegal conditions are void and are binding upon no one.” Thus, Georgia courts understand that contracts that are impossible to be performed cannot be enforced.
So, if a client says that they have to cancel the contract due to the COVID-19 pandemic, a relevant inquire is whether performing the contract has become “impossible” for legal purposes. In Georgia, “acts of God” can be a basis for claiming performing the contract was impossible but events which are based on human actions (i.e., “human agency”) will not.
Impossibility caused by an act of God Georgia provides that “[i]f performance of the terms of a contract becomes impossible as a result of an act of God, such impossibility shall excuse nonperformance, except where, by proper prudence, such impossibility might have been avoided by the promisor.”
Although Georgia law does not specifically state a global pandemic is an act of God, Georgia defines such acts as “[a] catastrophe arising from the force of the elements which human intelligence cannot predict nor the ingenuity of man foretell…”. Thus, in Georgia, “an accident produced by physical causes which are irresistible or inevitable, such as lightning, storms, perils of the sea, earthquakes, inundations, sudden death, or illness” which is not a result of “human agency” can be a basis for cancelling a contract due to impossibility of performance.
Still, as mentioned throughout this article, a dispute involving this defense may require an attorney’s advocacy. For example, the question of whether a COVID-19-related cancellation is an act of God will likely need to be decided by a judge or a jury. Thus, it would be wise to seek a lawyer’s opinion about whether you can enforce the contract because there was an enforceable unconditional promise to repay you or whether nonperformance is likely permissible due to “legal impossibility.”
C. Impracticability or Frustration of Purpose: Why they may not apply to you
Impracticability occurs when an event outside of a party’s control causes performance of a contract to be possible to enforce but unreasonably difficult. Georgia states that a party has not breached a contract “if performance as agreed has been made impracticable by the occurrence of a contingency the nonoccurrence of which was a basic assumption on which the contract was made.” For example, if a food vendor agreed to sell hotdogs at a basketball game, the basic assumption is that people will be present for the game. However, if no one shows up because the wrong address was published in all of the advertisements for the game, the client who hired the food vendor may claim that paying the vendor has become impractical.
However, impracticability—although it involves a hardship—does not typically excuse a party from performing the contract (i.e., the client who hired the food vendor may have to bear the loss).
Moreover, it is important to note that the defense of impracticability has been limited to the sale of commercial goods so this defense may not be available to a person performing a service such as photography. Again, speak with an attorney to determine if this defense is available to you.
Lastly, while “frustration of purpose” is sometimes cited as a defense in other states and within the Restatement (Second) of Contracts, Georgia’s courts are somewhat silent about whether this defense can be used in our state. Still, Georgia courts will consider the Restatement (Second) of Contracts when guidance is needed. So, if your lawyer is interested in raising the “frustration of purpose” defense, it might be worth a shot.
D. Conclusion: The best practice is to draft a thoughtful contract
Still the best practice is to draft a thoughtful contract. Determining whether your client has a right to cancel the contract will generally require a lawyer’s analysis and it may ultimately be a question for a judge or a jury. However, if you anticipate that a party may ask to cancel the contract after you have made investments such as leasing a studio, consider including clauses that make it clear that you require repayment for your losses, no matter the reason for cancelation. While this clause will not necessarily nullify Georgia’s “impossibility” defense, it will likely give you a lot of leverage when the judge or jury has to hear your case.
NOTE: If you need assistance drafting a contract, consider using PeachtreeESQ.com; it’s a Georgia-focused legal technology company powered by real lawyers licensed in our state.
Also, if your legal needs are complicated, feel free to contact an attorney at The Law Office of Trey Ross, PC. The firm’s web address is www.treyrosslaw.com and they are based in the Atlanta metropolitan area.
[1] O.C.G.A. § 13-1-1.
[2] O.C.G.A. 13-3-5
[3] O.C.G.A. § 13-4-21.
[4] Western Atlantic R. R. v. Hassler, 92 Ga. App. 278, 88 S.E.2d 559 (1955)
[5] O.C.G.A. § 1-3-3(3).
[6] Royal Indem. Co. v. McClatchey, 101 Ga. App. 507, 510 (1960). (See also Elavon, Inc. v. Wachovia Bank, Nat. Ass’n, 841 F. Supp. 2d at 1306).
[7] O.C.G.A. § 11–2–615.
[8] Calabro v. State Med. Educ. Bd., 283 Ga. App. 113, 115, 640 S.E.2d 581, 583-84 (2006).
[9] Restatement Second of Contracts § 265 (providing ““[w]here, after a contract is made, a party’s principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary”).
