Business Litigation & Contract Disputes During a National Crisis 

The current coronavirus crisis is testing our society in many different and challenging ways. One big topic of discussion, especially among business owners and business litigation lawyers, is the idea that these emergency circumstances may affect active contracts or insurance coverage and liability terms.

It is true that there will likely be many contract disputes that begin as a result of business disagreements during this crisis. So does a national crisis like the COVID-19 pandemic negate your company’s responsibility to uphold contracts? Legally speaking, how strict are business obligations in times like these?

What Is a Force Majeure Clause in Business Litigation?

Force majeure is French for “superior force.” So what is a force majeure clause in the context of a commercial contract dispute? Basically, it defines various circumstances beyond either parties’ control that could potentially make upholding the contract impossible or, at least, too difficult.

These circumstances generally include huge societal disruptions like war, terrorist attacks, natural disasters, famine or “acts of god” (you may recognize that last term from insurance paperwork). But right now the question is, will the pandemic trigger force majeure clauses? And the answer is, as often is the case in the legal world, it depends on the situation.

Determining Whether a Force Majeure Clause Has Been Triggered

The party invoking the force majeure clause may, in fact, be released from liability and excused from performing the duties laid out in the contract. But if the parties involved cannot reach an agreement, it will be up to a court to decide the rights of each party.

That means the treatment of these types of contract disputes can vary widely among jurisdictions in different cities and states. Some jurisdictions may take a narrow view of the language in the clause, ruling against any scenario that is not expressly written in the contract. Others may grant wide interpretations, taking extenuating circumstances into account, even when they were not explicitly articulated in the language of the contract.

That’s why it is always recommended to consult a business litigation lawyer when faced with a force majeure clause dispute.

Contact the Business Litigation Lawyers of Avera & Smith

If you are involved in a contract dispute or have further questions about force majeure clauses, please do not hesitate to contact one of our business litigation lawyers to schedule a free consultation. It does not matter whether your specific legal situation is related to the current coronavirus crisis. We are here to help you with any type of business litigation or insurance coverage and liability claims.