Key Issues with Commercial Contracts During COVID-19 

March 17, 2020

In these unprecedented times of the COVID-19 pandemic, it is important to consider what may happen to your commercial contracts. For example, does COVID-19 prevent performance? We have created a framework to consider when addressing the unique circumstances of today’s environment.

 

Framework:

  1. Identify the force majeure/impossibility provision in the operative contract; 
  2. If no force majeure/impossibility provision exists in the operative contract, determine whether the state providing the governing law provides for force majeure/impossibility by statute;
  3. Determine if facts support a triggering event;
  4. Be cognizant of the notice and timing requirements of the operative contractual provision or statute (this is a critical step); and
  5. Send the force majeure/impossibility notice letter. 

 

Be aware that in the event there is no force majeure/impossibility provision in the operative contract or by statute, another possible argument is common law impossibility and/or frustration of purpose. However, the availability and contours of these common law arguments will vary based on jurisdiction.

 

For more resources and LP's response to COVID-19, visit this webpage.

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