The COVID-19 pandemic has forced independent schools to face countless and unprecedented legal issues, many of which were previously only discussed as remote hypotheticals. While independent schools are continuing to face new challenges on a daily basis, schools would be well served to set aside time before issuing and re-issuing enrollment contracts for the 2021-2022 school year to address any areas of vulnerability and to reflect the realities of a post-pandemic world. Consider addressing these common trouble areas to protect the school against future unanticipated scenarios.
Force Majeure Clauses
In the spring 2020, many schools scrambled to determine how government orders restricting in-person learning would affect their operations, including the enforceability of their enrollment contracts. With enrollment season just around the corner, schools may want to take a close look at their contracts to ensure that they include a force majeure clause that supports the school's right to enforce the tuition obligation and guard against unanticipated emergencies.
A force majeure clause (French for "superior force") is a contractual provision that relieves either or both of the parties from performing all or some of their contractual obligations when certain circumstances beyond their control arise, making performance inadvisable, impracticable, illegal, or just plain impossible. Courts tend to interpret force majeure clauses narrowly; that is, only the events listed and events similar to those listed will be covered. With that in mind, it is especially important to specify any types of circumstances that could affect the manner or means by which the school delivers its educational programs. In addition to pandemics, force majeure clauses should also include the following: acts of nature, such as severe floods, wildfires, earthquakes, hurricanes, or explosions; fire; epidemics; strikes and labor disputes; and U.S. government restrictions, wars, acts of terrorism, and insurrections. Of course, it is wise to also include a catch-all, including other such events that are not the fault of either party, and which are beyond either the school's or the parents' control.
Finally, the force majeure clause should clearly state its effect on the party's contractual obligations. For example, an enrollment contract should state that parents are not entitled to a refund of tuition if a force majeure event occurs, if that is the school's policy. While we all hope that we never need to rely on a force majeure clause, schools will be glad to have them available in the event the need arises again.
Enrollment contracts, though legally binding, can be drafted in a way to that preserves flexibility. Specifically, schools can use their enrollment contract to hardwire flexibility into the delivery of its programs and activities in alternative ways. Preserving flexibility will be useful both during the pandemic and for years to come as outside circumstances affect operations. For example, be sure that the enrollment contract does not guarantee that the school will provide any particular program, activity, or curriculum that year or promise that it will provide such programs in any particular manner (i.e., in-person vs. distance learning). Rather, reserve the school's right to modify the school's programs, activities, and curriculum at its discretion.
Parental disagreement with school policies and decisions is nothing new to independent schools. Parental frustrations were amplified by the COVID-19 pandemic as schools were grappling with the decision to reopen against a backdrop of government recommendations that seemed to change by the day, if not the hour. While schools want parents to bring their concerns to the school's attention, parental disagreement with the school's policies and decisions can be highly disruptive and impede the school's ability to operate efficiently and effectively—especially during a pandemic.
A well-drafted enrollment contract provides tools that a school can use to discourage attempts to undermine the school's effectuation of its educational program. Specifically, set forth the school's expectations for families regarding their support of school policies and standards of conduct. Establish clear consequences when parents' behavior is disruptive or overly aggressive toward school personnel or the school community, including restrictions on parents' participation or involvement in school activities or events and even dismissal of their student from the school.
Payment Upon Withdrawal/Cancellation
The uncertainty created by the COVID-19 pandemic drove many families to ask for extension of time to decide whether to return this fall, while others withdrew well past deadlines. Clearly establishing a date certain after which parents are responsible for the full payment of tuition, regardless of the reason for the student's withdrawal/dismissal, is key in any enrollment contract. This is an even more important provision to consider now as families face continued uncertainty due to the COVID-19 pandemic, which may result in increased rates of withdrawals during the 2020-2021 school year.
If drafted appropriately, such contractual provisions can be considered liquidated damages clauses, which, generally speaking, means an amount the parties agree to pay in the event of breach of the contract. These provisions should clearly and unambiguously outline the circumstances under which the school will refund the deposit, refund tuition paid, and/or consider any waiver of the continuing tuition obligation, consistent with the school's culture and existing policies. They should also be carefully drafted to comply with applicable state law, which may establish specific circumstances under which the provision will be enforced by the courts.
Tuition Refund Plans
Returning to school amid a pandemic may spur increased interest in tuition refund plans. Tuition refund plans can help schools protect against the financial disruption caused by withdrawal and help parents who are seeking to be excused from a tuition obligation. Schools that already offer tuition refund plans should consult with their plan provider for more information regarding any modifications to their policy that are the result of COVID-19. Schools not yet offering tuition refund plans may consider doing so for the years to come.
Tuition refund plans generally cover students' tuition obligations when they withdraw from school for medical or psychological reasons, but also for disciplinary reasons in some cases. Many insurance providers have modified their policies to cover withdrawal caused by illness due to COVID-19. However, to be eligible for a refund under the policy, the student must withdraw from school for the entire covered year. Partial withdrawal, for the duration of the student's illness or during periods of distance learning, for example, is not covered under tuition refund plans. Moreover, most policies also require that the student attend the school for at least 14 days before withdrawal in order to be eligible for a tuition refund. Schools should review the terms of their tuition refund policies to confirm their plan's specific requirements.
The Venable Independent School Law is prepared to assist independent schools as they begin to review their enrollment contracts in light of the lessons learned from COVID-19. Independent schools with questions are encouraged to contact Caryn Pass, Grace Lee, Janice Gregerson, or Ashley Sykes for assistance.