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Will COVID-19 Have an Impact on My Contracts?


As you are likely aware, the novel coronavirus (COVID-19) outbreak has forced governments around the world to take extraordinary measures to mitigate and contain the pandemic. As more businesses shut down or shift their operations to adhere to the social distancing guidelines issued by the World Health Organization, the ability for parties to fulfill certain contract obligations can be compromised or impossible to do.

What Are My Options if My Contract Is Affected by the COVID-19 Pandemic?

If you can’t perform your contractual obligations because health and safety measures have made it impossible, irrespective of the cost, you may be excused from fulfilling the contract. However, if what you are expected to do under the contract can be accomplished but it would be much more expensive and difficult, then you might not have a valid legal reason for failing to fulfill the contract. If you don’t have a valid legal reason for not performing the contractual duties, then you can potentially be sued for breach of contract. Additionally, the country and legal system under which the contractual parties exist can impact this issue.

FAQ: Legal Consequences of COVID-19

Our dedicated lawyers at Mathur Law Offices understand that travel restrictions, lock-downs, quarantines, and supply shortages can have an impact on contracts and a party’s ability to afford, allocate resources, and meet the agreed-upon demands. If your contracts are being affected by the COVID-19 outbreak, then you should immediately consult with the experienced lawyer at our firm to determine your risk of liability.

Here are answers to important questions about contracts and the legal consequences of COVID-19.

Question #1: What is force majeure?

A: Events that cannot be controlled by the parties that signed the contract “which may or may not have been unforeseeable, the effects of which cannot be avoided by reasonable efforts or due diligence, the consequences of which is to impede or prevent the performance of the contract,” are referred to as force majeure under the common law. This includes acts of God, fire, war, riot, civil commotions, disease, epidemic, and pandemic.

Question #2: What is frustration?

A: A contract is frustrated if a supervening event occurs that fundamentally affects the performance of the contract. When a contract is frustrated, it is automatically terminated and the parties aren’t obligated to perform the duties in the future.

Question #3. When can a contract be renegotiated?

A: Generally, parties that sign a contract are free to renegotiate the terms of the agreement.

Question #4: Do I have to give notice of a force majeure event?

A: Most contracts that contain a force majeure clause usually have notice provisions that must be carefully followed. Some force majeure clauses require that the party produce a certificate issued by a designated authority certifying the circumstances of the event.

Question #5: Can a contract be suspended or terminated due to force majeure?

A: Under a common law jurisdiction, you can terminate or suspend a contract if it contains a provision that provides for it. Under civil law jurisdictions, the impact of the force majeure event on contractual performance will determine if the contract can be terminated or suspended.

We Are Here to Assist With Your Legal Needs?

Our legal team at Mathur Law Offices know that these are challenging times for us all, which is why we are here to serve you if you have a legal matter that has been impacted by the COVID-19 outbreak. Our law firm is equipped to handle a wide range of legal issues, and we are prepared to use our extensive knowledge of the law to ensure your best interests are protected.

To schedule a case evaluation with a lawyer at our firm, give us a call today at (888) 867-5191.