By Matt Hansen, Senior Associate

3 March 2020

The ongoing effects and impact of the spread of the COVID-19 coronavirus (“Coronavirus”) continue to be felt worldwide. While we all feel terribly for those currently afflicted, in the marketing sphere one of the impacts being felt is the potential disruption to campaigns like trade promotions and other competitions, that include travel prizes to overseas locations, or that source production material from impacted overseas markets. We are already seeing prizes heavily impacted by travel bans, or events that may be delayed or cancelled due to growing Coronavirus concerns. Recent news reports and industry chatter contain conflicting information indicating that events such as the 2020 Tokyo Summer Olympics could be impacted, the 2020 Melbourne F1 Grand Prix, and so on.  Of course, these events are central to many campaigns in 2020.

What is the current situation?

At the time of publication, travel to China and Iran is restricted. However, an increasing number of cases is being reported in South Korea, Italy and Japan. The virus is present in 33 countries and is spreading rapidly through Western Europe, Asia and the Middle East. Fears about the virus spread have already led to multiple events being cancelled or postponed, such as the 2020 Geneva Motor Show and the opening race of the MotoGP in Qatar, and tourism attractions such as the Louvre in Paris being closed.

In addition to travel limitations, many companies are closing their doors and sending workers home, to protect them. This may have a significant medium-term global economic impact, but in the short term the practical effect (especially where transit of goods from or through China is involved) is that it is getting considerably harder to ship goods around and do business in many markets worldwide, even when staff are not currently unwell.

What should I do if a campaign involves travel, such as a trade promotion including a travel prize?

Many campaigns, including shoots in foreign markets or trade promotions or other campaigns with travel prizes are being impacted. In the trade promotion example, you and/or your clients should consider the risk of the prize’s availability being impacted by any travel restrictions, firstly. Given active restrictions on transit through certain locations, it is not just the end destination that is an issue here.  Any trips to Iran or China will not be able to be taken, so in those cases it is wise to seek advice from us, after consulting any prize substitution clauses you may have in your existing competition terms and conditions, as well as consulting with prize suppliers.

If the prize does not involve a destination that is currently impacted, there is of course no guarantee that, in this fast-moving situation, this will remain the case. It is absolutely prudent to consult both the liability sections of the competition terms, as well as your insurance situation to check what you may and may not be covered for in terms of potential loss. Ensuring that travelers have appropriate travel insurances is also vital, as is ensuring that all parties are clear on their respective liability in the form of travel and participation waivers.

For travel prizes to locations where no travel restrictions are in place, but nonetheless are subject to travel warnings, such as Japan or Italy, it may also be wise to work with winners and advise them to delay their travel wherever possible, or also offer an alternative prize. It is likely that the spread of Coronavirus will take months to play out, meaning winners should consider delaying travel to later in the year.

For travel prizes contingent upon an event where travel cannot be delayed, consider offering the travel component of the prize only, and substituting the event tickets for an alternative prize.

What can I do if I ordered materials or services under a supply contract, but now they’re delayed due to Coronavirus and the campaign is heavily impacted?

This is a vexed question and will depend a lot on the exact situation. Crucially, the exact terms of your supply contract will be your best primary guide here. If you do not have a supply contract, contact us and we can talk you through your options.

What can I do if a trade promotion has already started offering travel to China, and the promoter is keen to pull the promotion before it is finished?

Promotions are a representation to consumers that a prize is going to be awarded, and Australian consumer protection legislation contains various strict regulations on this issue. Accordingly, if a promotion has commenced and entries have been received, the promoter is committed to delivering on that promise. This means that a promotion cannot simply be pulled if it has already commenced.

Most terms and conditions include a termination clause or similar, which allows for a promotion to be suspended, modified or cancelled in circumstances where it cannot be run fairly or as anticipated due to interference or fraud. Importantly, a clause such as this would allow for action to be taken as appropriate in the circumstances. Again, given the present facts about the Coronavirus, it may not be justifiable to completely cancel a promotion where offering an alternative prize would be more appropriate.

What if my promotion is connected to the Olympics and they are cancelled?

Given the significant investment in the Games, the likelihood of this transpiring is extremely low. However, in cases where a promotion is somehow tied to Olympic events, in the event the Olympics are postponed or cancelled, in those circumstances it would be appropriate to rely on a termination clause to postpone or cancel a promotion. If you are not sure on how to handle such a matter, you should contact us urgently for guidance.

In the event a promotion involves travel to the Olympics, you should consult any contractual agreements with your prize supplier to see what options you can present the winner, in terms of delayed travel or alternative prizes.

What should I do to protect my campaign moving forward?

Proper terms and conditions, proper liability waivers with participants and well-drafted contracts with suppliers will be key to navigating this unfolding situation.  In a promotional context, competition terms and conditions should include appropriately drafted clauses that allow for prize substitution or promotional modification or cancellation in the event of events beyond the promoter’s control. A pandemic situation should be specifically accounted for in any language moving forward as well, however in the event that the Coronavirus is not classified as a pandemic, it may be prudent to consider broader language such as “threat to health and safety”. Further, standard terms limiting liability are obviously a must.

It would also be prudent to take care with any prize supply agreements and ensure there are allowances for alternative prizes should the prize be impacted by the Coronavirus.

Lastly, always be sure to put the consumer first. Offer them alternatives to prizes if they or you have any concerns about travel. If the consumer is happy to take a travel prize you are concerned about, consider asking them to sign an additional waiver to enhance the enforcement of any liability limitation terms. In the interim, let’s all hope that this situation is over as soon as possible without further loss of life or significant illness.