Possible Contract Disputes Arising from the Coronavirus Outbreak

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Possible Contract Disputes Arising from the Coronavirus Outbreak

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The COVID-19 pandemic has wreaked havoc on much of the small business community throughout California. Staff shortages, mandatory closures, supply chain disruptions, and more have caused many companies to be unable to perform on existing contracts or sustain losses if other parties cannot fulfill their contractual obligations.

 

Parties that incur losses due to contract breaches might take legal action regarding the dispute, which can result in significant liability for the other party. It is important to speak with an experienced Walnut Creek business attorney if a dispute arises regarding one of your contracts.

Force Majeure Provisions

Many contracts have force majeure clauses that allow for the early termination of a contract in certain circumstances involving “acts of God” or similar disasters that are beyond your control. Some force majeure clauses specify which events will allow you to invoke the clause, while others are more general. California courts interpret these clauses a bit less narrowly than other states, and it is not required to have a specific event listed in the provision for that event to trigger rights under the clause. For example, even if your force majeure provision does not specify a viral pandemic, you still might be able to justify contract termination based on the COVID-19 outbreak.

 

Many contract disputes arising from the pandemic will likely center around force majeure clauses. However, even if your agreement does not include this type of clause, California law can provide some protections. Cal. Civ. Code § 1511(2) excuses performance under a contract when such performance is “prevented or delayed by an irresistible, superhuman cause, or by the act of public enemies of this state or of the United States, unless the parties have expressly agreed to the contrary.” This law might help many companies defend against breach of contract claims.

Contact a Business Litigation Lawyer in Walnut Creek for Help

If you are facing a possible contract dispute, do not wait to consult with a Walnut Creek contract litigation attorney at Yudien Law Firm, P.C. Contact us online or call 925.472.0600 today.

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