If you feel the title of this article seems like it was written in a different language, you are not alone. Combining the term ‘force majeure’ with COVID-19 can be confusing at a time already filled with uncertainty. However, COVID-19 has had a devastating effect on the business world, which largely relies on contracts to get things done. Business owners who are worried about how to minimize COVID-19 damage to your business, a force majeure clause may offer some relief.
Business Contracts Often Contain Force Majeure Clauses
You have probably signed many business contracts but may not have paid attention to the term “force majeure.” However, force majeure clauses are fairly common. The term refers to language in the contract that allows one or both parties to cancel the contract if “an extraordinary event prevents one or both parties from performing” the actions required by the contract itself. The ‘extraordinary event’ may also be called an Act of God or an event that was unforeseeable and unavoidable. Generally, the person seeking to cancel the contract cannot be the cause of the event.
If COVID-19 is considered an extraordinary event, you may be able to safely end a contract that you can no longer complete. However, this may not be as simple as it seems.
COVID-19: Force Majeure – or not?
Some force majeure clauses contain vague language that is open to interpretation. Differences in interpretation can lead to litigation when parties land on either side of the argument.
Leaders and people in the news call the COVID-19 a pandemic, an unprecedented event, and note that we are in uncharted waters. This would seem to prove that COVID-19 is covered by force majeure clauses. However, we may not be certain until courts begin to rule on cases involving termination of contracts due to COVID-19.
A Force Majeure Clause Might Minimize COVID-19 Damage
As soon as you can, review your contracts with your attorney. If you truly cannot perform the obligations you agreed to in the contract, you need to know as soon as possible so you can minimize COVID-19 damage to your business.
Attorney Richard Sierra at the Florida Small Business Center assists clients like you navigate COVID-19-era business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including: Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.