Looking at the Impact of the Coronavirus on Business Contracts
March 19, 2020
By Frank G. Salpietro, Esquire
Will a Force Majeure clause protect my business during the Coronavirus?
The COVID-19 (Coronavirus) pandemic has disrupted our business and personal lives in ways that we could have never imagined. From cancelling conferences and events, to closing workplaces, to restricting foreign travel, the negative impact on commerce is obvious.
Not as obvious (and perhaps easily overlooked in this time of uncertainty) is the impact of the outbreak on your business contracts. Specifically, it may be a good time to review the “force majeure” clauses of your agreements. Force majeure is a French term that literally translates to “superior force”. A force majeure clause in an agreement excuses performance of a contract when one or both parties cannot perform due to something outside of their control (typically something like a war, weather disaster or other catastrophic event). Some force majeure clauses are broad enough to cover pandemics, while others are not.
While, of course, your decision in these times should be based on protecting the safety and health of your employees, customers, and the public, and we would hope that both parties to an agreement will cooperate to work through performance issues, it is good practice to at least know the extent and application of your force majeure clauses. We would also recommend that all contracts moving forward contain a clause that specifically makes pandemics a “force majeure event”.
The business lawyers and litigation lawyers of Rothman Gordon are available to review and advise you regarding this or any other business concern you may have about the Coronavirus. Contact us online or call (412) 338-1100. Stay healthy and safe!