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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.

By Stacy Bauer

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The Six Feet Office

Cushman and Wakefield has not only begun to reimagine what our offices might look like when we return to work, they have started implementing the six feet office. They have helped more than 10,000 organizations in China, and developed a prototype in its Amersterdam headquarters. Eventually we need to get back to the office, let’s take a look at some of their suggestions.

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Guidance on Re-Opening a Business

We are being bombarded with information regarding COVID-19, its symptoms, its toll on frontline workers, and by the numbers. We are also being given guidance, often conflicting, on how to safely reopen a business once the governor provides the green light for each sector. Below are several links to CDC, OSHA, WHO and other internationally recognized health organizations, providing suggestions on how to safely re-open and remain open.

https://www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html
Interim Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease 2019 (COVID-19) | CDC
Guidance on Preparing Workplaces for COVID-19
Getting your workplace ready for COVID-19
Worker Exposure Risk to COVID-19
https://www.ey.com/en_us/transactions/companies-can-reshape-results-and-plan-for-covid-19-recovery
https://emtemp.gcom.cloud/ngw/globalassets/en/insights/coronavirus/lead-your-employees-through-emotional-impact.pdf

By JJ Divino

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Re-Opening Ohio

Friday, May 1: Hospital, medical, dental and veterinary services that don’t require an overnight hospital stay.

Saturday, May 2: Retail businesses that have been closed can open for curbside pickup, delivery and appointment-only shopping limited to 10 customers at a time.

Monday, May 4: Construction, distribution, manufacturing, offices

Tuesday, May 12: Consumer, retail and service businesses

Friday, May 15: Hair salons, barbershops, day spas, nail salons, tanning salons, bar and restaurants outdoor and patios can open.

Thursday, May 21: Restaurant dine-in locations and bar interiors can open.

What remains closed: Child care centers for most children, movie theaters, gyms, campgrounds, tattoo parlors, laser tag facilities, roller skating rinks, ice skating rinks, arcades, indoor miniature golf facilities, auditoriums, stadiums, arenas, parades, fairs, festivals, bowling alleys and more.