By: Daniel Bartlett
The catering company By Peter & Paul’s has sued Hotel X for unfair termination of its lease and is seeking $60 million in damages. With this NHL caterer out of work, there lies a potential loophole to sever existing contracts without a legitimate reason.
Covid-19 has impacted every major sports league and their business transactions, forcing some to relocate to a “bubble.” While there has been much success on the ice, the NHL faces controversy over its catering choice. In mid-July, By Peter & Paul’s workers jumped with joy when news broke that the NHL was coming to Toronto and staying at Hotel X for its bubble. The two companies were already in a catering agreement, and this new influx of hungry athletes alluded to promising opportunities. Unfortunately, the excitement did not last long since Hotel X chose to terminate its lease and go with Harlo Entertainment, a company with NHL ties to the Pittsburg Penguins.
The pandemic shut down By Peter & Paul’s business on March 23, 2020. This lack of business led the company to cease its rent payments from April through August. Hotel X claims to have been in negotiations with Harlo Entertainment, but By Peter & Paul’s suspects foul play. In the legal world, a stoppage in rent payments usually means a breach of contract performance. Hotel X seemed to rely on this pandemic induced breach to terminate its lease, but if the lease agreement contained a Force Majeure clause, things might bode well for By Peter & Paul’s. However, this is not a known fact for the public, and the court’s decision will be crucial to the business world.
The Force Majeure clause can
prevent a breach in an unexpected circumstance, and it will be up to the
lawyers to make this case for a global pandemic.
If no clause is present, it is likely that Hotel X will settle the suit. While
this benefits Hotel X, the outcome presents a real problem for companies with
no ties to the league. For example, the NBA chose to partner with ten
minority-owned businesses to feed its players and staff in the bubble.
The NBA seems to have the right idea, so why is the NHL cutting out the little
man? The social pressure could encourage leagues to partner with minority
businesses. Still, it is more likely that Hotel X’s argument will provide a
useful loophole to allow them to partner with only league affiliated
The pandemic has affected everyone, and
regardless of the breach, this disagreement is not worth $60 million.
Unfortunately, business is about efficiency, and By Peter & Paul’s failed
to complete their contractual duties.
On its face, this case presents a clear breach of contract, but the underlying
implications and outcome will have lasting effects on the sports business
 Josh Rubin, Catering company sues NHL bubble residence Hotel X for $60-million — alleges it was tossed for company with hockey ties, The Star (Aug. 31, 2020), https://www.thestar.com/business/2020/08/31/catering-company-devastated-after-getting-tossed-out-of-nhl-hotel.html?utm_source=Twitter&utm_medium=SocialMedia&utm_campaign=Business&utm_content=hotelxnhlbubble.
 Fraser McKeating, Can a contract be terminated if COVID-19 or government sanctions prevent performance?, Lewis Silkin (May 26, 2020), https://www.lewissilkin.com/en/insights/can-a-contract-be-terminated-if-covid-19-or-government-sanctions-prevent-performance.
 See Andrew Keh, ‘Bubbles’ Are Working. But How Long Can Sports Stay Inside?, NY Times (July 30, 2020), https://www.nytimes.com/2020/07/30/sports/basketball/sports-bubble-nba-mlb.html?auth=login-google. (describing “bubbles” as controlled environments for sports leagues to compete safely amidst the coronavirus pandemic).
 Rubin, supra note 1.
 McKeating, supra note 2.
 Anthony Meagher & Joe Kernan, Contract Clauses: Force Majeure, Termination and Suspension in the COVID Era, Law.com (Aug. 12, 2020), https://www.law.com/thelegalintelligencer/2020/08/12/contract-clauses-force-majeure-termination-and-suspension-in-the-covid-era/?slreturn=20200813120423.
 See David J. Marmins, Is the Coronavirus a Force Majeure that Excuses Performance of a Contract?, aba, (Mar. 19, 2020), https://www.americanbar.org/groups/litigation/committees/real-estate-condemnation-trust/articles/2020/winter2020-coronavirus-force-majeure-clauses-real-estate-contracts/ (describing the clause as a means to “allocate risk between the parties when an unanticipated event makes performance impossible or impracticable.”).
 These minority-owned restaurants are feeding the NBA Bubble, Click Orlando, (Aug. 10, 2020), https://www.clickorlando.com/news/local/2020/08/05/these-minority-owned-restaurants-are-feeding-the-nba-bubble/.
 Rubin, supra note 1.