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Force Majeure Contract Clauses

COVID-19 has caused us to take a deeper look at many of our business practices, including the physical workplace, business plans, and emergency contingency plans. Business contracts are another area that need review.

Business agreements routinely include boiler plate language, such as a force majeure clause. This language protects the parties in the event of an unlikely circumstance that would significantly impair either or both parties’ ability to perform, such as fire, war, flooding, earthquake and the like. While these clauses have rarely been relevant, the pandemic requires us to take another look.

One of the benefits of force majeure clauses is that they protect a party that is unable to perform from claims of breach of contract and related damages resulting from non-performance. The events listed in force majeure clauses differ from a breach of contract scenario because the party did not choose to not perform, rather circumstances beyond its control caused its inability and thus failure to perform.

If your business cannot perform under a contract due to COVID-19, either because of the virus itself or the government’s response to it (shelter in place orders, quarantine or other governmental restraints), look at your existing contracts to determine whether each has a force majeure clause and, if so, whether it is broad enough to include the current pandemic, and how the parties agreed to proceed in the event the clause is triggered. If there is no force majeure clause, or if it is not broad enough to cover COVID-19, there are other legal defenses that can help you, such as frustration of purpose and impracticability.

And while force majeure clauses and other defenses may be available, the best first strategy is to communicate with the other party to the agreement. Using common sense, issues related to non-performance or inability to perfom can hopefully be resolved without resorting to legal action.

Until now, virus, pandemic, quarantine and the like have not typically been listed in force majeure clauses. Many businesses are taking the time now to update their contracts to include such circumstances as a hedge against future unknowns.

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Paycheck Protection Program

We are navigating uncharted territory: COVID-19 the virus, the economic fallout, the government assistance programs. It seems that the SBA’s assistance programs, including PPP and EILD, change daily, maybe even hourly. This New York Times article from yesterday provides answers to frequently asked questions for small businesses, freelancers and more.

We are here if you need us, please reach out and we will do what we can to help you through these difficult times.

Stay safe!

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COVID-19

We are experiencing unprecedent times in connection with COVID-19 – social distancing, business closures, mental and physical health concerns, school closings, and more.  We have likely all been inundated with emails, posts and the news about the pandemic, the numbers, the expected numbers, etc. Of the numerous articles I’ve read about the various financial assistance programs, most of which are extremely confusing, this one lays it out well.  It explains the available programs for small businesses and non-profits, collectively referred to as the CARES Act.  Please feel free to reach out if we can answer any of your questions or concerns, or otherwise be of assistance.

Stay safe.

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What You Need to Know about Crisis Communications

We’ve seen notices from just about every type of business, delivered in just about every way imaginable, outlining the response to the COVID-19 pandemic. I think we can all agree, this is a crisis. So it’s time to review some basic, and oft forgotten, principles of crisis communications.

  1. Be honest. This one’s pretty easy, especially in states where non-essential businesses are shut down. Outline what, if any, service you’re still able to provide, and how to access it for the time being. If response times are going to be slower, set realistic expectations. This will help both your clients and your employees.
  2. Stay in your lane. Let’s leave the science to the scientists, folks. Don’t explain the virus. Whatever you say today, even if it is correct, will be old news tomorrow anyway. When you speak, speak about your business. And don’t predict when or how you’ll be able to return to normal, until we all really know when and how we’ll be able to return to normal.
  3. Stay professional. You have a brand for you business. Make sure everything you’re saying now, including what you say, how you say it, when you say it, and what channels you use, consistently reflects your established brand.
  4. Here’s the big one — this is actually a chance to enhance your client relationships, and perhaps pave the way for some new ones. You need to be balanced, and don’t come across as mercenary, but anything you can offer online, at advantageous cost structures, any message you can give about how you serve your community now and when normal returns, is important. Don’t just focus on doom and gloom — remind everyone we’ll see each other on the other side.
  5. Make sure you keep 1 through 3 in mind when you work on number 4!

If you’re having trouble crafting your message, try contacting a reputable crisis communications team for help. We’re happy to give you our recommendations if you reach out to us on our website.