Has Your Business Been Affected By The Coronavirus Pandemic? Let’s Talk Legal Options

In last week’s post, we discussed the ways you might be able to find some immediate relief for your business in the midst of this COVID-19 climate via the Force Majeure clause.

However, not all contracts contain this clause. So we’ve done you a solid and created a two-part series to explore some other legal options.

So what do you do if your contract does not contain a force majeure provision and you experience business interruption or loss?

Don’t worry, you may not be completely out of luck and your business may still get relief through one or more of the following legal options:

Frustration/Impossibility

These two concepts excuse contract performance where they apply.

In California, the defense of impossibility is expanded to include the doctrine of impracticability which is easier to demonstrate than impossibility. Under impracticability, a party can seek to excuse performance when it is so difficult and financially burdensome that it becomes “impracticable.”

Impracticability is invoked when there is excessive and unreasonable cost to carry out a contract and not merely when performance is more difficult or expensive than originally contemplated.

California also recognizes a “frustration of purpose” defense which can release a party from performing under the contract where an unforeseeable event essentially makes the contract pointless.

Suspension of Contract

You should look into the suspension or termination provisions in your business contracts to mitigate financial impact.

Some contracts such as construction contracts allow for termination when work is halted for a long period of time. Suspension and termination provisions can also assist owners by allowing temporary project suspension with less financial risk.

While the COVID-19 outbreak continues to evolve, you should carefully evaluate your contracts to make the best decision concerning ongoing work, project safety, and the mitigation of financial and timelines impacts.

Contact us to assist your business in evaluating your best options today at (949) 436-2785.