In addition to the obvious public health concerns, the COVID-19 pandemic and resulting mandatory shutdown of businesses across the country have raised legal questions regarding the contractual obligations and rights of businesses. In addition, the coronavirus has forced companies to reevaluate the ways in which they respond to crises. Below, we discuss the renewed interest in force majeure clauses and business continuity plans in the wake of COVID-19. For additional guidance on these issues, please contact a New Jersey commercial litigation attorney.
Force Majeure Clauses and COVID-19
A force majeure clause is language in a contract that allocates the risk of loss if performance becomes impracticable or impossible, particularly as a result of an event that is out of the parties’ control. In other words, a force majeure clause excuses one party’s performance of a contract due to certain unforeseen circumstances. With the COVID-19 pandemic, many parties have looked to such clauses for relief in either enforcing or excusing certain contractual obligations. Unfortunately, however, many have discovered that their force majeure provisions either fail to specifically address pandemics and mandatory government restrictions or contain broad terms that may not apply to the COVID-19 situation. Prior to COVID-19, parties generally felt comfortable including general, catch-all language in their force majeure clauses. However, contracting parties are having to reevaluate this practice in the wake of the coronavirus pandemic.
Business Continuity and COVID-19
In addition to force majeure clauses, businesses must have plans in place that allow for the continuation of operations during times of crisis. A business continuity plan is a strategic plan that details a business’s strategy for preventing and recovering from major business disruptions. All businesses should have a business continuity plan in place, and it should define any and all risks that might affect the business’s customers, operations, and employees. Businesses typically establish business continuity plans for things like arson, floods, and terrorism. Currently, however, companies are having to contend with an issue that many business continuity plans fail to address. The coronavirus outbreak has presented businesses with a number of unforeseen challenges due to its quick spread and global presence. Therefore, many businesses are currently taking steps to mitigate losses and update their business continuity plans to account for the COVID-19 outbreak.
Contact Our New Jersey Commercial Litigation Attorney
If you are a business owner or are in a dispute with a business due to the COVID-19 pandemic, you need an experienced attorney on your side. At Rosenblatt Law, our experienced attorneys help clients develop risk management strategies to mitigate the potential for lawsuits. However, when a dispute does arise, we have a proven track record of achieving successful outcomes at the negotiating table and in court. Therefore, if you need legal assistance in New Jersey, please contact us today to schedule a consultation.