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Breach of Contract During the Pandemic: Common Defenses and What To Do Next

BreachContract

COVID-19 has brought a plethora of changes that has transformed the way we live our everyday lives. As COVID-19 continues to worsen, health and government officials are finding the need to close down businesses and implement strict opening measures. Due these safety precautions, business owners are finding it increasingly difficult to meet their contractual obligations. Ambiguous lockdowns coupled with the hesitance of citizens to leave their homes has compromised a business owner’s ability to stay afloat amid the pandemic. Despite this change in situation, business contracts have still resumed as normal. While normal circumstances would penalize the business owner for their inability to stay true to their contractual terms, the circumstances of COVID-19 may allow the business owner to avoid civil liability.

Force Majeure

Force majeure is a French phrase that translates into “superior force.” A force majeure event is when an unforeseeable happening, often an “Act of God,” prevents a party from fulfilling their part of the contract. If a party is unable to avoid an event, and the event makes their obligation impossible to fulfill, then a force majeure can be applied. However, in order for a force majeure to excuse a breach of contract, a force majeure clause must also exist within the contract.

Impossibility of Performance

Similar to force majeure, impossibility of performance excuses a party from breaching their contract if the contractual obligation is impossible for uncontrollable reasons. In order to prove impossibility of performance, there must be evidence that the event was truly unprecedented and unable to be stopped. If an act is deemed objectively impossible due to the event, then impossibility of performance can be used as a defense to nonperformance.

Steps You Should Take

If you find yourself unable to stay true to your contract due to the circumstances COVID-19 has brought, start by taking these steps:

  1. Consult an Attorney: Nonperformance and a breach of contract is not an issue that is taken lightly. Especially if you are the party that is defending themselves, you will need an experienced attorney to help guide you through the complex legal process.
  2. Prepare Records: For a successful case, you will need paperwork that provides clear evidence and indication of how COVID-19 has affected you. It is important to show that you would have been able to fulfill your contractual obligations if it wasn’t for the ongoing pandemic.
  3. Review Your Contract: With your lawyer, it is important to check your contract for clauses and rights you have as the contract signee.
  4. Communicate: A contract is a formal agreement between certain parties so it is important to talk out your situation with the other party as well. It is important to know if your contract is able to be negotiated or if the other party is planning on taking you to court. Regardless of the outcome, it is important to stay informed and cognizant of your situation. This will better prepare you and your attorney for obtaining your desired results.

Searching For a Business Litigation Lawyer?

If you have been accused of a breach of contract amid the chaos of COVID-19, our skilled Chicago breach of contract lawyers at King & Jones may be able to aid you. To receive guidance and professional help on the intricate legal processes you are required to undergo, especially during these trying times, please do not hesitate to contact our office today at 312-372-4142.

Resources:

cdc.gov/coronavirus/2019-ncov/prevent-getting-sick/prevention.html

dph.illinois.gov/covid19/governor-pritzkers-executive-orders-and-rules

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