Contracts, Force Majeure, and COVID-19

As a result of COVID-19, many businesses and individuals are finding it difficult to uphold their contracts and agreements. In many cases, the purpose of the contract has been frustrated. Government restrictions, social distancing requirements, and quarantines make the performance of some contracts impossible. Many people anticipate that the Coronavirus pandemic will result in an increase in litigation over claims of breach of contract.

We will help you evaluate whether the doctrine of “force majeure” applies to your or your business’s contracts. “Force majeure” refers to events that are unforeseen and beyond a party’s control. A contract may include a “force majeure” clause that governs the parties’ rights and duties in light of COVID-19. The contract may not specifically use the term “force majeure.” Some contracts may refer instead to “act of God” or more generally to unforeseeable circumstances that render the performance of the contract impossible. Not all contracts contain such terms. When a contract does include a “force majeure” clause, the parties must determine whether the COVID-19 crisis falls within the scope of that clause and whether it is the cause of either or both parties’ inability to perform the contract.

Whether or not the contract includes a “force majeure” clause, a contracting party must consider the application of other laws. For example, the Uniform Commercial Code includes detailed terms that govern every contract dispute involving the sale of goods. All contracts include an implied covenant of good faith and fair dealing. Similarly, all parties to contracts have a duty to take reasonable steps to mitigate damages. Legal doctrines such as the impossibility of performance and failure of condition precedent will be relevant to many contracts and agreements affected by the Coronavirus pandemic.

Keating Wagner’s business litigation group has decades of experience helping businesses and individuals prosecute and defend claims of breach of contract. Whether you are seeking to enforce a contract or defend against enforcement, our experienced lawyers will protect your and your business’s legal rights.