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Chicago Business Litigation Lawyers > Blog > Breach Of Contract > The Impact of COVID-19 on Contractual Obligations

The Impact of COVID-19 on Contractual Obligations

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COVID-19 has wrought devastating effects on the world as a whole. In the United States, businesses have taken large blows from a diminishing workforce, shutdowns, and an overall large unpredictability. With workers staying safe, the workforce shrinks a bit, with shutdowns, many companies cannot even operate at normal operating tempos. With these realities come the notions that contractual obligations are bound to be delayed and even incomplete at various points as the pandemic continues to rage on. COVID-19 has impacted contractual obligations in new ways and for novel reasons. With the right mind, however, solutions can always be found and or made.

Losses of Jobs and the Consequences

One of the largest threatening aspects COVID-19 has posed for businesses is general unemployment. It is well near impossible to continue to run an operation without a greater majority of the people that make that group effort possible. As such, because of COVID-19, many companies have found that their workforce cannot be as full-staffed and in peak performance as it used to be, pre-pandemic. Losing these employees’ availability has made it hard for many companies to stay afloat, as there’s no staff to help keep contractual obligations fulfilled. Of 16.9 million unemployed Americans in July, 2020, 9.6 million individuals (or well over half) reported being unable to work due to their employer closing or losing business because of the pandemic.

With a basic estimate of how many Americans have had to take a hiatus from work due to the pandemic, it suddenly becomes a lot clearer as to why contractual obligations have been troublesome and frustrating around this time.

The Legal Circumstances Surrounding COVID-19

COVID-19 has resulted in more breached contracts, it has opened up a slew of complications for how to deal with the pandemic and the breached contracts tied into it.

There are three main responses to breached contracts businesses have had to take.

Impossibility defenses have arisen from the notion of the government stay-at-home orders, but more commonly the simple lack of personnel available to complete a project. Without workers, the work cannot get done.

Frustration of purpose are contracts that cannot be completed as originally agreed upon. Take for example a wedding planner who cannot complete their end of the contractual agreement given that there cannot be a wedding in public due to orders or cancellations.

Force majeure is the general blanket topping these uncertain times. Force majeure is the uncontrollable and unexpected aspects of life that can cause a contractual agreement to fail, all due to the sudden nature of what is causing the contract to go unfulfilled.

These are the new precedents being set for the future, and are also the most common aspects of how contractual agreements have become a lot more nuanced due to the pandemic.

Do You Have Questions Regarding Contractual Obligations?

The pandemic has claimed a lot from Americans, and the world as a whole. Businesses have taken large hits, and many have been finding themselves facing new breach of contract claims and accusations. If you need help with breach of contract accusations, or have any questions regarding contractual agreements during COVID-19, please do not hesitate to contact our staff at King & Jones. At King & Jones, our Chicago breach of contract attorneys care about you and those struggling with these trying times. Please, do not hesitate to call 312-372-4142 today to schedule your free, no-risk consultation with our business law attorneys to discuss your case further.

Resources:

bls.gov/cps/effects-of-the-coronavirus-covid-19-pandemic.htm#:~:text=About%2031%20percent%20of%20people,not%20in%20the%20labor%20force.&text=Of%20the%2016.9%20million%20people,business%20due%20to%20the%20pandemic.

americanbar.org/groups/business_law/publications/blt/2020/04/contracts-covid-19/

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