Covid & Contracts

In this episode of “Ask Jade” Jade Carpenter shares information regarding the COVID-19 pandemic and business contracts that every business owner should be addressing. Jade shares information regarding Force majeure and what that means for contracts that you may have signed.

Today I am going to touch on what many of us are dealing with right now – COVID-19 and contract cancellations. During this time, many people are looking to get out of contracts if necessary. There is a term that is commonly used to encompass both acts of nature, such as floods and hurricanes, and acts of man, such as riots, wars and pandemics. That term is called Force majeure.

This is an old, archaic legal term and the rationale behind it is that when entering into an agreement both parties are not always going to anticipate certain acts of nature or acts of man that might impact the agreement. Obviously with certain things such as COVID, neither party is responsible. This scenario is when Force majeure would come in play. However, you need to be aware that you could not invoke Force majeure if it is not in your contract.

It is important to read your contracts and consider if the issues could have been foreseen and mitigated, or if the performance is just merely impractical or difficult rather than truly impossible.

Obviously with advent of COVID-19, around the March timeframe, Force majeure was able to get you out of contracts because COVID was unforeseen at that time. Currently, when we enter into contracts, we are all aware of COVID. It should by now be something on our radar when an agreement is formed. It is particularly important that you are adding the appropriate clauses into your contracts. If you are reopening your business and people are coming back and you don’t have a waiver of liability or clause in your contract, please reach out to me and I will help you get those added in.

If you are back up and running your business and do not have a clause, there are alternatives to a clause. There are some common law principles that you could try to fall back on, such as impossibility or impracticability. The impediments must be unforeseen, and the contract must be impossible to perform at this point. If you cannot fall back on those principles, you can always try to fall back on your business interruption insurance. This is important insurance to have.

In closing, I thought it was important to address this topic briefly since many of us are dealing with business and contract issues right now because of COVID.

As always if you have questions about it as always, feel free to reach out to the Law Office of Jade Carpenter, and I would be happy to help! See you next time.