Even in Florida – a state that weathers frequent natural disasters – the COVID-19 quarantine has had an unprecedented effect on the business world. We all have to worry about family and friends. However, as a business owner, you also have to deal with profound changes to the way you do business. There’s a good possibility you may be unable to meet contract terms, at least for some of your contracts. If so, what steps can you take to handle this delicate situation?
Get Legal Advice
Talk to your corporate counsel as soon as you realize you may have trouble completing any of your contracts. Your Florida small business lawyer has a good foundation in Florida business law. On top of that, he or she is focused on helping clients recover from the COVID-19 shutdown.
Specifically, your counsel may suggest one of three ways to justify cancelling the contract:
- Impossibility or impracticability, which means conditions beyond your control prevent you from completing the contract. For instance, you agreed to take a group out on your charter fishing boat, but the boat sank because of a hurricane. It is now impossible to complete the contract obligations.
- Frustration of purpose, which means that you are able to complete the contract, but performance is no longer needed. An example of this might be that you agreed to provide equipment for a concert, but the concert was cancelled because of COVID-19 quarantine. Now, there’s no reason to provide the equipment.
- Force majeure clauses, which may excuse performance of the contract because of forces beyond your control. Common triggers for this type of clause include acts of God, riots, civil unrest, war, extreme weather conditions, and government actions.
Legal counsel is advised for every step that follows.
Review Your Contracts
You may have many contracts to look over. Consider the following as you begin your review:
- Business Relationship. What kind of relationship do you have with the other party or parties? If you have a great working relationship, you might be able to collaborate on solutions. On the other hand, tread lightly if you already have an adversarial relationship with the other party.
- Contract Terms. Check your contract for any provisions that address your inability to meet contract terms. For example, your contracts may include language that acknowledges certain events that could prevent performance of the contract.
- Timing. You may be unable to meet contract terms now but could do so in the future. Is the other party to the contract willing to postpone performance?
After you have talked to your attorney and reviewed your contracts, you may be ready to take the following action.
Unable to Meet Contract Terms? Talk it Out
With your attorney’s advice, contact other parties to discuss the situation. Because of the widespread nature of the coronavirus emergency, you may find other business owners ripe for a discussion.
However, some people may still want to force you to complete the contract. You still have options:
- Negotiations. Try to discuss ways to settle this amicably. After all, sustaining current business relationships at this point might be the key to successfully reopening your business.
- Mediation. When negotiations fail, you might try mediation, a form of alternative dispute resolution. During mediation, the parties to a legal disagreement meet with a mediator. The mediator attempts to facilitate an agreement.
If all else fails, the other party may sue. At that point, you and your attorney can work on defenses to the lawsuit.
Are You Unable to Meet Contract Terms Because of COVID-19?
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with 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.