Breaking Commercial Contracts During COVID-19
Many businesses may not be able to fulfill their contractual obligations on time or at all due to the widespread outbreak of the COVID-19 coronavirus. If you are a business owner wondering if you can get out of a contract because of the pandemic, this post is for you.
To determine if your contract can be breached because of the pandemic depends on a lot of factors, all of which must be reviewed by a business attorney thoroughly. An attorney can help you navigate through the requirements of the provision and aid your legal process.
At a minimum, we need to look at three factors:
- Do you have a written contract that’s legally enforceable?
- If so, does your written contract have a force majeure clause?
- Does the force majeure clause include the coronavirus pandemic?
What is a “Force Majeure” clause?
Force majeure is French for “superior force,” and in the contract world it is legalese for an event that cannot be anticipated or controlled. Think “Act of God,” or an event that no one could have foreseen.
A force majeure clause excuses a party from their contractual obligations because of a major unforeseeable event that makes it impossible for a party to complete their end of the bargain.
Which events are considered force majeure events?
To answer this question, we must look at the force majeure events included in the specific clause of your contract. It’s a case-by-case legal analysis. Some force majeure clauses can include natural disasters like floods and earthquakes, violence such as war or civil unrest, shortages of power or even epidemics, pandemics, and mandated quarantines, such as events connected with the COVID-19 coronavirus.
Your contract may include a list of events in the force majeure clause as those listed above or it may not. Just because the coronavirus pandemic itself is not included does not mean that you cannot invoke the clause as an excuse from your obligations under the contract. So, it’s important to have a business attorney review your contract for the legal analysis and to help guide you through the legal process.
What should I do about my contract during the coronavirus outbreak?
I know this may seem like the obvious answer, but you must hire a business lawyer to review your contract to answer the three questions above. The answers are not simple, and they require a legal analysis of the negotiated terms, the breach at stake, the scope of the force majeure clause and the direct cause of your inability to complete your obligations under the contract.
There are different conditions that change the outcome for everyone. A case-by-case legal analysis is required for each individual case to determine which plans of action are best for you and your business.
We can help!
When you wish to break an agreement, the Benkabbou Law Firm, PLLC team will be able to fully examine your situation, help complete the application, and inform you of options available to you. Call our office at 813-586-3351 or email us at firstname.lastname@example.org to schedule a consultation with one of our attorneys. We look forward to being of service!
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