What Do You Do When Your Contract Does Not Contain A Force Majeure Clause?
As the coronavirus disease (COVID-19) continues to spread rapidly throughout the United States—and the world—commercial relationships are being thrown into disarray, resulting in the disruption of supply chains, cancellations of events, and closures of restaurants and other businesses. Several states have declared a state of emergency (including banning large group gatherings and mandating that certain business shutter for the time being). Many companies are requiring that their employees work remotely. As a result of the substantial impact on “business as usual” operations, companies are facing decisions about what to do when COVID-19 circumstances make it difficult (if not impossible) to comply with certain contractual obligations. Will COVID-19 provide your company with a legal defense excusing performance?
If you are operating under a contract governed by United States law, the first place to look for the answer is within the four corners of the contract document itself. Specifically, check your contracts to determine whether there are force majeure or other impossibility of performance-type clauses. If not, are you out of luck? The answer differs depending on the subject matter of the contract.
Continue Reading Is Your Contract Virus-Proof? [Part II]