I. Introduction
In recent years, the cancellation or postponement of music festivals shortly before the scheduled date, ostensibly on grounds of “force majeure” or “objective circumstances,” has become increasingly common, with a corresponding rise in disputes between organizers and performers. Following cancellation, organizers typically seek full restitution on the ground that no performance was rendered, whereas performers refuse repayment, relying on the prior reservation of performance dates and the consequent loss of alternative commercial opportunities. This article accordingly examines the judicial approach to such disputes, focusing on contractual obligations and risk allocation, the defence of force majeure, the treatment of payments following termination, and the damages.
II. Contractual Obligations and Privity of Contract
Liability depends first upon how the agreement allocates obligations. While the organizer ordinarily undertakes overall planning, venue procurement, regulatory applications, security, stage production, publicity, and ticketing, the performer is principally required to reserve the artist’s performance dates and to ensure that the designated artist appears and performs in accordance with the agreement.
Where the venue has not been secured, the approvals have not been obtained, or other conditions essential to performance remain unsatisfied owing to organizer, the organizer will generally be regarded as having breached its obligation, and the fact that the failure was occasioned by a third party does not relieve the organizer of contractual liability to its counterparty. Article 593 of the Civil Code provides that a party which breaches owing to a third party must nevertheless bear contractual liability to the other contracting party, while its dispute with that third party is resolved separately. Accordingly, judicial decisions generally uphold the principle of privity of contract, and the mere fact that a cancellation was not attributable to organizer does not constitute a ground for avoiding contractual liability. Whether a third party has breached its own agreement concerns only the legal relationship between that third party and the organizer and does not relieve the organizer of its antecedent liability to the performer. Having discharged that liability, organizer may seek recourse against the third party under the relevant contract.
III. The Force Majeure Defence
Organizers frequently invoke force majeure by reference to governmental policy, the refusal or non-issuance of approval, or venue safety concerns, thereby seeking exemption from liability for breach. The Court, however, engages in no abstract or categorical classification, examining instead whether force majeure has been made out, whether it is causally connected to non-performance, and what legal consequences follow.
Under the Civil Code, force majeure consists of objective circumstances that are unforeseeable, unavoidable, and insurmountable. Force majeure does not automatically excuse liability in full, but instead operates to exempt liability wholly or partially according to its impact on performance. Where the contract does not specify the circumstances constituting force majeure, the organizer, as the party invoking the defence, must establish not only the objective existence of the impediment but also its causal relationship with non-performance, timely notice and supporting evidence within a reasonable period under Article 590 of the Civil Code, and reasonable steps to avoid or mitigate loss. An assertion of force majeure supported solely by a public announcement, an internal statement, or a post hoc explanation will be insufficient to discharge that burden.
IV. Post-Termination Treatment of Payments and Damages
Following cancellation or postponement, either party may exercise a contractual or statutory right of termination under the Civil Code. Upon termination, unperformed obligations cease, whereas, with respect to obligations already performed, the parties may seek restitution, adopt other remedial measures, and claim damages in light of the nature of the contract and the circumstances of performance. The treatment of paid amount is often the most contentious issue, since, although the artist may not have performed, the performer may already have reserved the dates, secured the artist’s confirmation, and undertaken promotional cooperation, thereby sustaining scheduling losses that render restitution commercially and legally difficult to accept.
Adjudicative bodies does not, as a general rule, adopt an all-or-nothing approach but instead undertake a comprehensive assessment of the contractual terms, the payments made, the legal character of the sums paid, the extent of performance, the evidence of loss, industry practice, the parties’ respective degrees of fault, and considerations of fairness. A clear non-refund clause will generally be respected. Absent such a clause, a performer that has sustained loss may be permitted to obtain compensation through retention or a separate damages claim, provided that it establishes such facts as the reservation of the performance dates, the artist’s confirmation, payments to upstream counterparties, and the occurrence of other scheduling losses.
Although the performer bears the burden of proving scheduling loss, the structural features of the live-performance industry render that burden particularly onerous, since the revenue and costs of a single performance are typically dispersed among the artist, agency, production team, and third-party service providers, and ex ante profit margins defy precise calculation. Where loss and cost exist but cannot be precisely calculated, Article 62 of the Judicial Interpretation on the Contract Part of the Civil Code confers upon the Court discretionary authority to determine the amount of damages in light of the benefit obtained by the breaching party, the degree of fault, other circumstances of breach, and the principles of fairness and good faith. Any loss assessed must also satisfy the foreseeability requirement, which is evaluated in light of the contractual purpose, prevailing trade usage, and the course of negotiations between the parties, and is generally constrained by the total contract price as an important reference for determining the ceiling on recovery. However, in judicial practice, there still exists considerable uncertainty.
V. Conclusion
Having regard to the foregoing, it is suggested that, the parties to a performance agreement, at the formation stage, stipulate whether recurrent risks such as governmental approvals, venue procurement, security, and changes in governmental policy fall within the scope of force majeure, and expressly prescribe the disposition of payments and the allocation of liability upon termination, so as to minimize uncertainty in the ascertainment of liability and quantum.
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Partner Mark Wang.