Should a SportsLeague Provide a Refund on Prepaid Fees Due to Closure Because of Covid19?
The Law Will Likely Require At Least a Partial Refund of Prepaid Fees Due to Closure of Recreation Facilities; However, a Player Should Carefully Consider How Hard to Push the Issue Lest the Team or League Withdraw the Opportunity to Join and Play in the Future.
A Helpful Guide For How to Evalute a Legal Position Regarding Prepaid Fees Involving Recreational Sports League Contracts
He Shoots, HE SCORES is a phrase unheard from the stands of summer league rinks during the off season 2020 whereas the closure of sports facilities and requirements for social distancing have kept both players and fans away from the rinks. Sadly, in addition to the lack of social outlet and recreational activity, many players, sponsors, among others, lost monies prepaid to the leagues, tournament organizers, bus operators, among others, due to the legally mandated shutdown of sporting activities and closure of facilities, such as the hockey rinks, as well as non-essential businesses such as concession stand operations, among other things.
The mandated closures and league operation shutdowns arises per an enforceable Order issued in accordance to the O. Reg. 82/20 to the Emergency Management and Civil Protection Act, R.S.O. 1990, c. E.9, that became effective on March 24 2020. As an unfortunate consequence, summer hockey league operations, among other sports, were suspended and the players and teams are now looking at a much shortened season, or even a fully lost season if the Covid19 Crisis is significantly prolonged.
Rights and Duties
For most people, the general principle that where a bargain is made, and paid for, the goods and services must be delivered is easy to understand and appreciate. Furthermore, as explained below, the laws that apply are so broad and generalized as to apply to, among other things, fees for sports league memberships; and accordingly, players as league members who paid for but fail to receive the services as purchased and promised within the team or league package, are quite likely entitled to refunds or rebates. However, players may want to think carefully about pushing the issue of refunds or rebates due to the risk of losing access to future participation. Essentially, players will want to evaluate the team and league politics before raising voices in demand of refunds and rebates.
A team or league membership agreement may include a clause referring to a force majeure event. A force majeure is, typically, an unexpected and unpredictable event outside the control of the parties to a contract. A force majeure clause within a team or league membership may refer to events such as weather disruptions, among other things, and perhaps even be detailed and broad enough to include a pandemic such as the Covid19 Crisis. Where a contract contains a force majeure clause, the contract will address special terms of understanding for how the parties will treat the contract in such circumstances. Whereas a force majeure clause, if any, will be unique to the standard agreement of each specific team or league, each force majeure clause will require a specific review.
In the current situation, being the Covid19 Crisis, the inability of a team or league to provide league participation and use of the sporting facilities arises due a lawful Order by the government in response to a public health emergency. Accordingly, any inaccess occurs as a lawfully imposed mandate rather than as a result of a failure to perform per the contract. Essentially, the hands of the team or league are tied. The team or league are forbidden from providing, at least temporarily, what was promised within the contract.
When a contract becomes impossible to perform due to an outside force beyond the control of the parties to the contract, such as where a team or league is unable to provide access due to a government mandated closure, the team or league is without fault and therefore without a breach of the contract. Instead, the contract may be deemed frustrated as opposed to breached. Accordingly, the player, having prepaid for the benefits promised within the contract will be unable to successfully sue the team or league for a breach of the contract.
Instead of 'breach of contract', where a contract becomes frustrated due to an unexpected and unforeseen circumstances beyond the control of the parties to the contract, the law may deem the further obligations within the contract as a nullity; and accordingly, the parties to the contract are thereby relieved of the further obligations within the contract. This is stated within section 3 of the Frustrated Contracts Act, R.S.O. 1990, c. F.34 where it is said:
3 (1) The sums paid or payable to a party in pursuance of a contract before the parties were discharged,
(a) in the case of sums paid, are recoverable from the party as money received for the use of the party by whom the sums were paid; and
(b) in the case of sums payable, cease to be payable.
With the above said, it is possible that some salvage of a season will occur as the government relaxes social distancing mandates; and accordingly, failing to receive everything that was promised within the team or league contract may be unlikely. Where some benefits were already received, even if simply receipt of a team shirt or team sweater, and some further benefits remain possible once the closure mandates are lifted by the government, only a partial remedy rather than a full refund may be legally required. The concern for partially received benefits is addressed by sections 3(2),(3) of the Frustrated Contract Act wherein the party, such as a team or league, having provided some of the goods or services paid for, and having incured expenses associated with providing those partial services, deserves some relief and protection against providing a complete refund for what may now be, or may become, a contract terminated without fault and due only because of the Covid19 Crisis as an incident outside the control of anyone.
Statutory Rights to Invoke Cancellation
In some circumstances, such as where a league season was cancelled or substantially delayed, and perhaps more so if the delay further continues, the statutory provisions within section 26 of the Consumer Protection Act, 2002, S.O. 2002, Chapter 30, Schedule A, provide the consumer, being the player, with a right to cancel the contract if the start of the services as contracted for, meaning the start of scheduled games within a sports league, are delayed by thirty days or more. Specifically, the Consumer Protection Act, 2002 says:
26 (1) A consumer may cancel a future performance agreement at any time before delivery under the agreement or the commencement of performance under the agreement if the supplier,
(a) does not make delivery within 30 days after the delivery date specified in the agreement or an amended delivery date agreed to by the consumer in writing; or
(b) does not begin performance of his, her or its obligations within 30 days after the commencement date specified in the agreement or an amended commencement date agreed to by the consumer in writing.
Where a player does wish to cancel an agreement per the rights within the Consumer Protection Act, 2002, if any, there are very specific procedures including notice requirements that must be followed. To ensure that the requirements are obeyed and rights remain valid, it maybe in the best interests of the player to obtain legal advice and help.
Lastly, for many sports leagues, the fees are relatively minimal and may be less than the cost of the fees for legal help. In this situation, it may be beneficial for many players to 'team up' in hiring the legal help so to share the cost rather than incurring separate fees. By getting help as a team, rather than individual, the legal fees each player incurs are minimal and may make the pursuit of a refund, or rebate, on league fees worthwhile.
The Covid19 Crisis is unprecedented and unprecedented legal issues are occuring. Exactly how the law will address various legal issues remains unclear. When disputes arise, by being proactive, maintaining respectful communication and compassionately appreciating that everyone is experiencing unexpected difficulties, the parties to contracts, such as recreational sporting leagues, can best ensure that legal disputes are avoided or minimized and that quality ongoing future focused relationships are maintained.