Coronavirus and Contracts

In recent weeks, we’ve seen the effects of COVID-19 (“Coronavirus”) on our economy and society in many ways. In sports, as of the date of this writing, the National Basketball Association has suspended its season and many NCAA tournaments are scheduled to be played without fans in the arenas. In academics, colleges and universities have cancelled spring semesters, extended breaks, and arranged to hold classes online. In arts, many music concerts are being cancelled. And, travel and vacations are being disrupted throughout the country and worldwide.

In all of these situations, there may be a contract in place to provide for various products and services that will no longer be provided. Naturally, the question arises: since there is a contract in place, is the party who fails to fulfill its obligations in breach of contract and therefore liable to pay damages?

While the answer to this question is surely different for every contract and situation, one determining factor may be whether the contract contained a “force majeure” clause. A force majeure clause is a contract provision that excuses a party’s performance of its obligations under a contract when certain circumstances beyond the party’s control arise, making performance inadvisable, commercially impracticable, illegal, or impossible. These clauses are often found in the “boilerplate” sections of contracts and are not often closely scrutinized or negotiated when the contract is written. However, with Coronavirus making an increasingly significant impact on our economy, it is likely that many people and businesses will be requesting that their performance under their contracts be excused because fulfilling the terms of the contract is no longer practical or possible.

If you’ve had a cancellation, you are well-advised to read your contract, and if you have questions on its enforceability, please contact one of the attorneys at Lynn, Jackson, Shultz & Lebrun.

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