Contract Performance Issues with COVID-19

Businesses are encountering situations that they never imagined, planned for or anticipated with this pandemic. There may be a time when you have issues delivering on a contract or having a vendor deliver to you, there may be options. Is there anything you can do?

Below is a proactive list. It isn’t exhaustive, but it’s a start. Additionally, we have listed a few considerations if you anticipate triggering your force majeure clause in a contract. Again, they are general. We can help provide guidance and insight into your contractual issues with regard to COVID-19. Please contact us for additional information.

Proactive Tasks to Mitigate Risk

• Analyze and document the pandemic’s effect on your business at this moment. Analyze your future ability to meet your contractual obligations
• Consider updating your standard contracts to address viral epidemic or disease related business disruptions.
• Draft notice letters now if you anticipate a delay or disrupted performance. Have them reviewed by your attorney.
• Discuss amending current contracts to state triggering events and the notice requirements.
• Keep detailed business records.
• Stay current on all governmental and regulatory notices and policies.

If you have a triggering event

• Give notice. Review contract and adhere to all deadlines and conditions for notice. Over communicate. Providing notice before the actual disruption may be required.
• Do not use force marjeure when it does not apply. Courts are unfavorable to opportunistic claims. The more direct your link of disruption to COVID-19 the cleaner the argument.
• Talk to the other party. Negotiate waivers, extensions, creative solutions. It will be cheaper, faster and most likely a better solution than lengthy litigation.
• Know you contract. Unilateral, upstream and downstream provisions matter.

Communication and flexibility are vital to surviving these uncertain times.