Contractual Duty of Performance During the Coronavirus Pandemic

Since Coronavirus (COVID-19) hit headlines in early January 2020, the United States response to the virus, which began as dismissive,[1] has become serious in short order causing major uncertainty for business, labor, and consumers. State and local governments have declared states of emergency and announced limitations on group events as well as public dining restrictions.[2] Major retailers are cutting hours[3] or closing all together until more is known about the spread of the virus.[4] Following suit on March 16, 2020, the Whitehouse issued guidelines designed to stem the spread of the COVID-19. Per the federal government's recommendations, Americans are directed to work from home whenever possible, avoid gatherings of 10 people or more, and avoid dining-in at bars and restaurants.[5] While most restrictions currently in place have a sunset period of a few weeks, a Department of Health and Human Services report -not yet released to the public- anticipates the pandemic could last as long as 18 months and include multiple waves of illness.[6]

The uncertainty caused by COVID-19 and the realities of social distancing has the government and many businesses playing catch up, leading to enormous disruptions in commerce and supply chains on a global scale. In light of these disruptions, businesses and individuals must assess their contractual obligations and remedies in these unique circumstances where performance may become dangerous or impossible. The attorneys at Cosgrove Law Group, LLC are prepared to advise businesses and individuals who have questions regarding their contractual obligations and whether COVID-19 has triggered a force majeure or escape clause in their contract.

FORCE MAJEURE

Commonly known as an “Acts of God” clause, a Force Majeure clause is a fixture in many standard contracts “allocating the risk if performance becomes impossible or impracticable, esp. as a result of an event or effect that the parties could not have anticipated or controlled.” BLACK'S LAW DICTIONARY 718 (9th ed.2009). The clause can function as a catch all to relieve a party of liability when the parties’ expectations are frustrated due to an “unforeseeable occurrence” beyond the parties’ control. Or, it can be tailored to encompass specific events which allow nonperformance (i.e. drought, tornado, war, terrorist acts, pandemics, shortages of labor or material). However, “[w]hen the event that prevents performance is not enumerated in the force majeure or escape clause, but the clause lists specific events followed by a general catch-all phrase, it is appropriate to apply the precept of ejusdem generis. 17A Am.Jur.2d Contracts, supra, § 664. This precept holds that ‘[g]enerally, when words of general description are used in connection with a specific enumeration of articles, the general description will include only articles similar to those specifically mentioned.’ West v. Nichols, 227 S.W.2d 760, 762 (Mo.App.1950).” Clean Unif. Co. St. Louis v. Magic Touch Cleaning, Inc., 300 S.W.3d 602, 610 (Mo. Ct. App. 2009). If your ability to perform or enforce performance of a contract has been affected by COVID-19 or workforce shortages Cosgrove Law Group, LLC is available to provide advice about your contractual rights and obligations during this pandemic.

 

[1] https://www.factcheck.org/2020/02/will-the-new-coronavirus-go-away-in-april/

[2]https://www.kmov.com/news/st-louis-county-coronavirus-restrictions/article_c6f8df4c-64aa-11ea-905e-d7faf21d6c31.html

[3] https://www.businessinsider.com/walmart-cuts-hours-at-2200-stores-amid-coronavirus-2020-3

[4]https://www.businessinsider.com/13-retailers-announce-temporarily-store-closures-to-fight-coronavirus-2020-3#lvmh-3

[5]https://www.whitehouse.gov/wp-content/uploads/2020/03/03.16.20_coronavirus-guidance_8.5x11_315PM.pdf

[6] https://www.nytimes.com/2020/03/17/us/politics/coronavirus-government-army-corps.html