COVID-19 effect on the education business: know your rights

The COVID-19 pandemic has had unprecedented effects on individuals and corporations all around the world, causing major societal shifts and has resulted in unforeseeable changes to many businesses worldwide. This article focuses on the effect of COVID-19 on a very sensitive industry that, in one way or another, is relevant to all of society. No matter where you are, what sector of business you are in or even how old are you, you may somehow be connected to the education sector. Whether you are a parent, student or even a school owner/manager, this article will help you understand your rights and obligations as a result of the COVID-19 outbreak.

Since the beginning of March 2020, after the WHO announced that the COVID-19 virus is a global pandemic, schools, colleges and universities have been scrambling to deliver their curriculums as smoothly as possible through 21st-century technology under the concept of “Distance Learning/Online Education”.

Whilst the decision of schools to shift their service from “Live Education” to “Online Education” was due to the UAE’s government direction to close schools as a measure of fighting the spread of the COVID-19, this is legally considered as a unilateral change of the schools’ obligation, whilst expecting the parents’ obligations (mainly payment of fees) to remain the same. There are no explicit provisions in the UAE’s education laws that account for this type of situation, therefore we must turn to the principles of contract law. To examine this situation further, the concepts of force majeure, good faith and hardship must be considered.

In short, force majeure is a mechanism by which parties to a contract, each of whom are under a different set of obligations, are either fully or partially released from their obligations in response to a force majeure event. Namely, these events would cover acts of God, such as hurricanes or tsunamis, and they may be extended to pandemics such as COVID-19. Article 273 of the UAE Civil Transactions Law No.5 of 1985 (“Civil Transactions Law”) describes two situations of force majeure:

• either the performance of the contract by a party is impossible and so that party is discharged, in which case the corresponding obligation of the other party is also discharged, and the contract is automatically cancelled; or
• if the performance of the contract by a party is partially impossible, that impossible part is discharged and the corresponding part for the other party is also discharged. This may also be for a temporary, not necessarily permanent, period. The parties would then have the option to cancel the contract.

Returning to the contractual obligations of both the school and the parents, we notice that schools have essentially invoked this concept of partial impossibility under force majeure to modify their obligations to provide Online Education, instead of what they have offered the parents at the beginning of the relation, which is Live Education. Whether Online Education is a sufficient replacement to Live Education is a heavily debated argument.

In other countries, the concept of Online Education has been known for decades and is subject to its own set of regulations, rules, overseeing bodies and systems. However, this is not the case we are all encountering at the time being. While Online Education provides flexibility, availability and self-direction, and it is clearly the only way that education may continue during these trying times, it comes with many pitfalls, for example:

• There is not much accountability to or supervision by teachers;
• Limited interaction with other students and teachers;
• Technological hurdles; and
• Parents are not trained professionals to oversee this process (especially with higher grades).

In summary, this is not what Online Education has ever promoted.

As the nature of the schools’ and education providers’ obligations have changed, this may trigger the corresponding change in the parents’ obligations to pay reduced fees, on the basis that students are no longer using the institutions’ utilities, transportation, meal options, social activities etc.

Online Education must be supervised by parents who are facing potential pay cuts or redundancies and are juggling their family life with their work and professional commitments at a completely new level. The benefits that schools are gaining from the reduction in their costs should ideally be reflected back to the parents by way of a discount or refund on tuition. As of the date of this article, within the UAE, there has only been one school group, which announced a 20% reduction in school fees. Other schools may follow suit, but thus far this has not been the case. Although the invocation of force majeure should be enforced on both sides, education providers are changing their obligations without allowing the other side – the parents who are paying the full fees – to benefit from the force majeure mechanism too.

Article 246 of the UAE Civil Transaction Law imposes a degree of good faith on contracts and places them in the wider context of observed customs and the nature of the transaction. What this means for our purposes is that the interpretation of the schools’ and the parents’ obligations should be re-examined in light of the current events. Both parties need to exercise a degree of good faith in how they perform their obligations and in what they accept from the other side. Education providers should take into account the circumstances of the parents if they expect the parents to accept the alternative ways in which they are performing their obligations so as to not destroy the mutual benefits that were originally agreed upon.

Under Article 249 of the UAE Civil Transaction Law, a party to a contract who is facing partial impossibility to perform its obligation may ask the court to amend the parties’ obligation to reset the contract economic balance. To put it simply, the court may find that the only legally reasonable response to the effect of the pandemic for the purposes of continuing education was to switch to Online Education rather than Live Education, and correspondingly, reduce the financial burden on the parents. This is the hardship approach in which a judge, at his discretion, may alter obligations to re-balance them in the interests of justice.

Conclusion

The education providers have amended their obligations of delivering Live Education system as a result of the partial impossibility due to the COVID-19 outbreak. Well, this is entirely legal on the basis of force majeure and the partial impossibility of delivering their original services, however, the takeaway from all of this is clear: the decrease in the use of the education providers’ resources should be reflected in what the parents pay in annual fees. Some examples on which the education providers can make a compromise is through:

1. a carried-over discount on transportation, uniforms or tuition fees for next year;
2. refund on pre-paid transportation, tuition or activities fees; providing payment and instalment schemes for the various fees;
3. applying specific discounts on fees to parents who confirm they have been affected financially due to COVID-19 too, or
4. exchange the value of the fees already paid for other/future school services and activities.

Lastly, the best way in which education providers and parents can reach an understanding is for the education providers to open up a line of communication to hear the parents’ reasonable suggestions, complaints and worries, and education providers to be creative and flexible. This approach would go a long way to show good faith on both sides.

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