Force Majeure and Impossibility of Performance: Contractual Uncertainty Under the Shadow of the Coronavirus
As California and the rest of the world adjust to the vastly different landscape under the shadow of the coronavirus COVID-19 pandemic, fulfilling contractual obligations may become increasingly difficult and, in many cases, impossible. Many businesses want to know what impact this will have on contractual obligations: How will we comply with manufacturing supply agreements? How will we obtain financing to purchase real property when loans are no longer available? Can my business count on other businesses to fulfill the terms of our agreements? The answer might lie in the force majeure provision of your contract, to the extent it has one and, if not, under California Civil Code section 1511.
A force majeure clause is the application of the doctrine of impossibility or impracticability where performance of a contract may be excused when (1) an unforeseeable event (such as an act of God), (2) outside the control of either party, (3) makes performance impossible or impracticable. Under California Civil Code section 1511, performance of an obligation may be excused “[w]hen it is prevented or delayed by an irresistible, superhuman cause . . . unless the parties have expressly agreed to the contrary.” These general requirements also include a demonstration that the party invoking the “impossibility” defense must show that it used reasonable efforts to surmount the obstacles which prevented performance. While force majeure may excuse performance entirely in some circumstances, force majeure sometimes may only temporarily suspend the obligation to perform while the exceptional condition persists. When the condition resolves you may have to perform if the other side still requires your performance.
Whether you might be entitled to relief under a force majeure clause (or whether you are concerned that someone might invoke a similar provision against you) or Civil Code section 1511 will ultimately require an analysis of your contract and the facts surrounding your specific situation. Caldarelli Hejmanowski Page & Leer LLP is here to help you navigate and understand the businesses challenges you may face during these uncertain times.
COVID-19 and Real Estate
Local and state governments have responded rapidly to the COVID-19 pandemic. Just yesterday, Governor Newsom announced that the State of California secured support from major financial institutions, including Citigroup, JP Morgan, U.S. Bank, and Wells Fargo, along with approximately 200 other banks, credit unions, and lenders, who are offering residential mortgage payment forbearances up to 90 days for borrowers economically impacted or who’ve experienced financial hardship as a result of COVID-19.
Meanwhile, several cities throughout California have enacted temporary moratoriums on eviction and/or foreclosure lawsuits covering residential, retail, commercial, and industrial real estate. The law with regard to these executive orders and municipal resolutions remains fluid. Whether you are a property owner, renter, or business owner, Caldarelli Hejmanowski Page & Leer LLP is here to help you with your real estate, business, and employment law needs and answer your questions during these challenging times.
Caldarelli Hejmanowski Page & Leer Has Your COVID-19 Employment related Answers
With businesses shuttering, transitioning to telecommuting, complying with travel bans, and bracing for the short- and long-term economic impacts of COVID-19, CHPL is here to help you and your business navigate these difficult times. The attorneys at CHPL have more than 20 years’ experience in employment law and have the answers to your employment-related questions. Give us a call at (858) 764-8107 or email Marisa Janine-Page at email@example.com.
In these unprecedented times, CHPL is here to help guide you through the applicable employment laws, so that you satisfy your obligations to provide “a place of employment that is safe and healthful” for your employees.
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