We understand that your businesses are currently being affected by the
COVID-19 pandemic and the resultant shutdowns, work stoppages, and government-imposed restrictions. And your businesses are facing, or will soon be facing, two intractable legal problems:
- Individuals or companies that you do business with will want to use the pandemic as an excuse not to perform under a contract, commercial lease, or purchase or service agreement;
- You have performance obligations with counterparties that have literally become impossible to perform, or the pandemic has caused such severe economic hardships by governmental fiat or otherwise, that performance by you is simply impracticable.
Under either scenario, it is imperative that you understand the contours of the various legal defenses that can be asserted as a defense to contract performance. The following is our effort to give you a basic understanding of these defenses. It is broken up into three types of defenses that can be raised under the current situation:
- Force Majeure;
- Material Adverse Change Clauses; and
- Commercial Impossibility or Impracticability
We put together a description of these defenses and how they can be applied in your business disputes.
Please read: Contract Defenses in the Age of COVID-19