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Unable to Fulfill Your Contractual Obligations Due to Covid-19?

By: Jacqueline R. Bowden Gold, Esq. and Phil Rarick, Esq.

The Coronavirus has left the US economy in a stand still. It has forced businesses to shut down and events to be cancelled or postponed across the nation – creating significant anxiety for small business owners. During these times, many businesses are unable to or fear they will become unable to fulfill their contractual obligations.

Here is a term you’ve probably heard before but never paid much attention to: Force Majeure. If you are unable to fulfill your contractual obligations or are worried that the obligor (the person who has a duty to perform) under an existing contract will not perform, Force Majeure is an important provision to look for in your contract.

Many contracts includes a Force Majeure provision,  which until now, were  seen as mere “boilerplate” and rarely used. Force Majeure excuses the performing party from their contractual obligation as a result of unforeseen circumstances that would render performance illegal, impossible, impracticable or inadvisable.

There is no standard Force Majeure clause – some may mention viral pandemics, others not.

And every contract will vary on how to properly proceed under this provision without breaching the contract.

Before trying to exercise your right to not perform under your contract you should consult with an experienced Miami Lakes or Weston business law attorney.   Alternatively, if you are the obligee (the person to whom the duty is owed to) and have received notice from the obligor to exercise this right under the contract, before responding it is advisable to consult with an experienced attorney. All contracts vary: it is not as simple as notifying the obligee that you are unable to perform due to the coronavirus.

Our focus at Rarick & Beskin has always been and remains to help small business survive and thrive in good times and bad.  If you or your business has been impacted as a result of the coronavirus, Miami Lakes and Weston business law attorneys at Rarick & Beskin are here to help you. We are available to review your contracts, analyze what legal options are available, and assess the risk of default if you try  assert a Force Majeure clause.

Note:   If you are a small business owner continue to check our website for updates on small business relief programs under the CARES Act.  Click here: CARES Act and Paycheck Protection Program.

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