Businesses and individuals around the world are currently being drastically affected by the coronavirus The World Health Organization has declared COVID-19 a global pandemic, and both the federal and California State governments have declared states of emergency as a result of the coronavirus pandemic.
If you are part of a legal business contract, you may find your ability to fulfill your obligations in that contract affected by safety precautions enacted to combat this virus. In this case, you may be able to use the legal concept of force majeure.
What is Force Majeure?
Many contracts include a provision relieving a party of performing its obligations under a contract in the event of a force majeure. A force majeure clause in a contract typically defines certain events outside the control of the parties that will render performance of the contract impossible. More specifically, the clause excuses nonperformance during the pendency of the force majeure.
Examples of force majeure include war, terrorism, and natural disasters such as fire, flood, hurricane, earthquakes, and other "acts of God".
Typical Force Majeure Provisions
A common example of a force majeure provision in a contract is:
“Force Majeure. Neither Party shall be held liable for any damage sustained by the other Party as a direct or indirect consequence of the non-performing Party being delayed, prevented, or hindered in the performance of its obligations under this Agreement as a result of a force majeure situation. Force majeure situations include war and mobilization, catastrophes of nature, strikes, lock-out, fire, terrorism, riots, import and export regulations, unavailability of communications facilities or energy sources, and other acts of God.”
If you are involved in a contract dispute or are concerned about whether you can perform your obligations under a contract affected by COVID-19 or force the other side to perform, you should review the agreement to determine whether it includes a similar force majeure clause.
Such clauses are fact specific. If the coronavirus pandemic is impacting your ability to perform on an agreement, you may have a right to relief. Relief may be as simple as more time to make the payments or provide the service, or it may include a complete excuse from payment or performance.
What If There Is No Force Majeure Clause?
Even where there is no force majeure clause in a contract, California courts (and most states’ courts) imply a covenant of good faith and fair dealing. Especially during this pandemic, it is wise to act in a reasonable fashion, and to expect reasonable accommodations from your contracting partners. Each contract and situation is different.
For an analysis of your rights and obligations, call Adams Corporate Law today and get the experienced legal advice you need.
Reach out to Adams Corporate Law, Inc.
Contact Adams Corporate Law to learn about your rights and obligations during the coronavirus crisis. We can help you make informed decisions regarding whether to perform or compel someone else to perform under your critical contracts you’re a party.
For more than 20 years, Adams Corporate Law, Inc. has helped clients like you understand their contracts, renegotiate the terms, and find mutually beneficial resolutions to business issues. We’ve worked with thousands of contracts and helped clients resolve disputes and prevent disputes from becoming larger problems.
Our business attorney has the experience and adaptability you need to handle coronavirus business law matters. Judgment, wisdom, and experience can help you protect your business interests and navigate the uncertainty of this coronavirus pandemic. At Adams Corporate Law, we can provide all of that and more when you need legal support.
Contact Adams Corporate Law, Inc. online or call us at (714) 699-9602 to schedule a consultation and learn more about fulfilling or enforcing contracts affected by COVID-19.