VFLA Eventco, LLC v. William Morris Endeavor Entertainment, LLC, 2024 WL (March 6, 2024) involved the loss of $6 million in deposits that had been paid to secure the performances of various artists at a two day musical festival known as Virgin Fest Los Angeles.  The event was cancelled due to the Covid-19 pandemic.  In the first portion of the opinion, the Court of Appeal found that the artists were entitled to retain the deposits under the contract's force majeure clause.  

The plaintiff argued this interpretation would constitute an invalid forfeiture or penalty.  In the second portion of the opinion, the Court of Appeal rejected this argument.  First, the Court noted that the forfeitures usually involve a breach by the forfeiting party, but here there was no breach on the part of the plaintiff.  The Court allowed that forfeiture may also exist when there is "an unfair divestiture of property that bears no relationship to the actual damages anticipated by the parties when they negotiated the contracts."   The Court concluded that a reasonable relationship existed between the amount of the deposits and the range of harm anticipated by the parties at the time of contracting. 

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