COVID-19 impacts almost every area of life and the community. Although we cannot address the myriad of possible issues that may arise, rest assured that as a full-service law firm we are here to help. Whether it is contracts, real estate, employment law, insurance coverage or any other matter keeping you awake at night, we have an attorney who can help you. We are here for you during these challenging times.
Below are some business areas in which the COVID-19 outbreak may be impacting you. Please contact us if you have any questions or concerns. (480) 344-0934, mferrin@davismiles.com, or (480) 733-6800. LegalShield Members call 602-285-4664 or in New Mexico 505-246-0231.
BUSINESS
If you are in business, now is the time to check your contracts. Given the global impact of COVID-19, it is inevitable that some companies may be unable to fulfill their contractual obligations. For some, relief may be found in a common contractual provision called “force majeure.”
What is a force majeure provision and why does it matter?
If you sign a contract that is more than two or three pages, it likely contains a common provision called “force majeure” (fr. “superior force”). Force majeure excuses a party from fulfilling a contract when the cause is an unforeseen event; such as earthquakes, floods, storms, etc. These clauses protect the parties in the event that part of the contract cannot be performed due to circumstances outside of the parties’ control and could not be avoided by the exercise of due care.
These clauses will often be defined what constitutes an unforeseen event. Sometimes this definition is as broad as “an act of God” or “government action” or it can be as specific as listing out every event or happening that could qualify. Contractual performance is typically excused for the duration of the event or, if the event continues for an extended period of time, the entire contract may be terminable.
Notably, some of these clauses require the party show that it made a reasonable effort to mitigate the effects of the unforeseen event or will require the party to provide written notice prior to unfulfilling the contract, called a breach. If notice or mitigation is required before the breach, it is important that these steps are taken in a timely manner.
What should I be doing?
Review your contracts. First, think about your supply chain. Do you rely on foreign vendors? Do you rely on “human power?” If so, you may be at risk for breach. Second, review your contracts and look for a force majeure provision. Does your contract contain one? Is it specific (i.e. listing out every single happening) or is it broad? Even if your contract does not contain such a provision or if the provision in your contract does not include something like COVID-19, a breach may be excused. Third, does the provision require that you to provide written notice or take steps to mitigate the damages? If so, it is important that you take these steps in the manner and timeframe required under the contract.
We are here to help
We are here to help you. Please contact us if you have any questions about your obligations under a contract or its interpretation. An ounce of prevention is truly worth a pound of cure. Call (480) 733-6800! LegalShield members call 602-285-4664 or, in New Mexico call 505-246-0231!