Contracting (around) the Coronavirus
The world is ending! How will the coronavirus (COVID-19) pandemic impact your contracts and your bottom line?
It’s hard to find an area of life that the global outbreak of coronavirus isn’t currently influencing. People are being told to work from home. Business associates have stopped shaking hands. N95 face masks are being stolen from hospitals. The stock market is plummeting and meanwhile videoconference software stock is soaring. Costco is selling out of hand sanitizer, people are being quarantined, and airlines such as United Airlines have cut domestic flights by at least 10% as people cancel travel plans to stay home.
At a time like this, the one question at the top of everyone’s mind must be: “How will this global crisis affect my commercial contract? Does this qualify as a force majeure event and excuse performance?”
I feel greatly accomplished as I deliver to you the most lawyerly answer of my career….the impact of the coronavirus on your contract depends on context and the wording of your contract. So, read all your contracts’ force majeure clauses or, better yet, ask a lawyer to read them for you!
Do not assume coronavirus automatically triggers your force majeure provision because force majeure provisions vary widely. For example, does the provision mention diseases or just acts of God? Does the contract force you to prove you are unable to perform and attempt to find a workaround? If coronavirus has triggered your force majeure provision, there will likely be time-sensitive notice requirements you need to adhere to. Additionally, if you believe the coronavirus is impacting your business and/or affecting your rights or obligations under a contract, insurance coverage (like your business interruption insurance policy) may be a consideration and require additional notice, so read that policy too! Notice requirements are notoriously particular and failure to timely do what they say may mean you lose all kinds of contractual rights.
If you’re courageously moving forward with your business and entering into a new contract in today’s post-apocalyptic hellscape, you probably want to consider how a worsening of the coronavirus could impact your performance of the contract. Be a prepper. Draft for the most likely contingencies, like travel restrictions and governmental action, so you won’t have to worry if the next pandemic makes performance under a contract impossible.
All this to say, if you want help assessing the impact of the coronavirus outbreak on your business and/or contractual relationships, feel free to call us-we’ll be working from home.
