The Effect of Coronavirus on Consumer Contracts

As with any significant societal change, the coronavirus has presented new legal issues to be addressed by the existing law or, in some instances (such as housing re-possessions and possible closures in the hospitality industry), by new emergency legislation.

Friends and clients (the two are not always mutually exclusive) have been in touch over one such issue. With economic hardship on the horizon, and various industries impacted by closures and social distancing, one side is wondering “will my customer still have to pay?” and the other “can I get my money back for that?

I want to focus on “consumer contracts” (business to consumer) in this article rather than commercial contracts (business to business). Although some of the principles discussed will apply to commercial contracts, consumer contracts are subject to additional rules mainly found in the Consumer Rights Act 2015 and the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, so there are a number of unique considerations which come into play.

What are consumer contracts?

Broadly speaking, consumer contracts are contracts entered into between:

  1. A “trader” meaning someone acting in the course of their business providing goods, services and/or digital content; and
  2. A “consumer” meaning someone who is contracting with a trader for reasons that do not relate to their own business or profession (i.e. for personal means).

Which consumer contracts will be affected by coronavirus?

Some examples of consumer contract subject matters which may be affected by coronavirus include:

  • Weddings
  • Gym memberships
  • Package holidays
  • Music events/concerts
  • Festivals
  • Live sport fixtures
  • Home renovations

Can I get out of my contract because of coronavirus?

Whether you can end your contract will, of course, depend on the subject matter and the actual terms that have been agreed. Having said that, I have set out some ways in which parties may postpone or terminate a contract as a result of coronavirus.

Events beyond a party’s control or “force majeure”

Commercial contracts will often have what is known as a “force majeure” (French for superior strength) clause which will set out circumstances in which one or more party may postpone performance of their contractual obligations and in some circumstances terminate the contract altogether. Consumer contracts may also have similar provisions but the onus is on the trader to ensure these terms are easy for the consumer to understand.

Generally speaking, if the trader terminates the contract without a right to do so, the consumer should be entitled to a full refund and may even have a claim for any losses arising from that termination – this applies whether or not the contract has been terminated because of coronavirus. However, if the contract includes a force majeure clause then the trader may be able to postpone performance of their obligations and avoid issuing a refund. In consumer contracts, this is perhaps most relevant for contracts which provide for an event taking place on a specific date, such as a wedding, concert, sports fixture or festival.

So, is the force majeure clause enforceable? A trader should actually avoid using the expression “force majeure” in their consumer contracts and should instead include a clause dealing with “events beyond our control” or something similar. In any case, the events which trigger the clause should be clearly set out in the contract. Some common examples would include natural disasters, terrorist attack, armed conflict and perhaps epidemics and pandemics.

The more comprehensive the clause and easy it is to understand, the more likely it will be enforceable. Clauses which specifically refer to epidemics/pandemics are a trader’s best bet but references to “acts of God” or a more general/catch all “any other event beyond our control” may also be triggered by coronavirus.

If the clause has different possible interpretations, it is likely to be construed in the consumer’s favour.


If there is no force majeure clause, either a trader or a consumer may be able to rely on the common law doctrine of “frustration” to end the contract. A contract is “frustrated” when unforeseen events make performance of one party’s obligations impossible, or radically different from that which was intended.

Courts are reluctant to allow parties to rely on the doctrine of frustration. This is because the doctrine undermines the binding force of a contract so, in order to avoid an increasing number of parties seeking to rely on it to get out of their obligations, its application has been rightfully limited.

It is doubtful that failure to perform a contractual obligation as a result of government guidance will allow a party to claim the contract has been frustrated because performance is not “impossible”. However, the doctrine may come into play if performance of a trader’s obligations cannot be achieved as a result of forced closure of their premises or mandatory isolation of a contracting party.

It is worth noting that there must, by definition, come a time when the impact of coronavirus will be reasonably foreseeable and those party to contracts formed after that time are unlikely to be able to rely on this doctrine.

Can consumer law help me get out of my contract?

It may be that the contract can still go ahead, but the consumer or trader does not want it to. This could be for a number of entirely understandable reasons:

  • A party may be self-isolating or may be high risk
  • A reduction in consumer income may mean they are unable to afford the goods or services now
  • The contract is for an event or service which will put parties in contact with a number of other people contrary to social distancing guidelines

Cancelling a contract

I have advised both traders and consumers on the enforceability of consumer contracts and the first thing I look at is whether the contract is one which the consumer should have a right to cancel. The right generally applies to contracts concluded at a consumer’s home (referred to as “off-premises contracts”) or by another means that does not require simultaneous presence of the parties such as online, by email, or over the telephone (referred to as “distance contracts”). Contracts concluded with both parties being present at the trader’s business premises are not likely to include a right to cancel.

The standard cancellation period is 14 days, however, this extends by a year if certain information detailing the consumer’s right to cancel and how that can be exercised is not provided at or before the point of contract. Typically, the information is incorporated into the trader’s terms and conditions or perhaps provided by way of a separate “notice of cancellation rights”. Well advised traders will have procedures in place to enable them to prove they have supplied this information. For example, by asking the consumer to sign an order form acknowledging receipt of the notice of cancellation rights or at the very least by saving an email or letter to the consumer containing the information.

If the consumer cancels the contract, they can usually expect a full refund within 14 days. A trader may be able to charge a cancellation fee and recover some of their expenses in certain circumstances but this would need to be provided for in the contract.

Unfair contract terms

Even if the contract is comprehensive (i.e. it contains a broadly defined force majeure clause (see above) and all the cancellation information has been provided), the majority of terms still have to be “fair” or they will be unenforceable under the Consumer Rights Act 2015 (‘CRA’).

Whether a term is unfair or not depends on whether it was agreed in good faith and also whether it creates an imbalance of the parties’ rights to the detriment of the consumer. There is a helpful list of terms which may be regarded as unfair at Schedule 2 of the CRA. This is a good place to start for a consumer who is unsure about a term in their contract.

It is worth noting that a term which enables the trader to terminate the contract and keep any advance payments without providing the goods or services is almost certainly going to be unenforceable either because it will be considered unfair or because it will amount to an unlawful exclusion of liability.

What to do if my contract is affected by coronavirus?

This is a difficult time for all parties and no one needs the added costs and stress of a court battle. Both traders and consumers should try to be reasonable and reach some form of agreement. Consumers should try to accept that there will be some disruption and work with traders to try and find a way forward. On the other hand, traders should try to identify which risks they are responsible for and avoid trying to pass their own losses onto consumers.

For disputes involving higher sums, it is worth consulting a solicitor as soon as possible.

Traders may also consider this an opportunity to review their terms and conditions. Have you included a comprehensive force majeure clause? Do you have appropriate mechanisms for supplying the information about cancellation rights? Are the terms fair?

If this article raises any issues for you – please feel free to get in touch with me or one of my colleagues on 01202 292 424 or by email to