If There Is Another Shutdown...Is It ‘Force Majeure’?

The biggest biz lesson we learned from 2020? As much as we wish we could grab a crystal ball and see into the future, we can’t predict what’s going to happen or how it will impact our businesses. As attorneys...my team and I were TRAINED for this stuff. Assessing all the “what-ifs”. Protecting from worst case scenarios. Playing the devil’s advocate. It’s basically in our blood. 

And yet, the pandemic proved what we’ve always known: You need to be prepared for anything.

The good news is, there is HOPE on the horizon for small businesses with the release of the vaccine (thank you #science). But we still can’t say for sure what’s going to happen in terms of differing states and counties implementing protocols. That means another shutdown is not completely off the table, which begs the question:

“If a stay-at-home-order or increased restrictions are put into place again...is that a force majeure event?” 

As a reminder, force majeure in legal terms is defined as “unforeseeable circumstances that prevent someone from fulfilling a contract.” A force majeure clause in your contract relieves one or both parties from performing their obligations under the contract when certain circumstances arise that are beyond their control, and were ‘unpredictable’ and ‘unforeseeable’ at the time of contracting such as a natural disaster or … a pandemic. 

I have addressed the issue of Force Majeure in previous blogs, YouTubes, podcasts and social media posts basically ad nauseum at this point, but its something that is important for us all to understand as small business owners right now in today’s world. And, I want to be clear here--Force Majeure is an essential clause to include in all of your contracts. Basically the biggest lesson ever learned in 2020!

Last year, it was no doubt that the Covid-19 virus caught us all by surprise. No small business owner could predict the devastating effects that the Covid-19 would have on so many industries, or that it would essentially change the entire way we structure our businesses. The most important thing to note is that AT THE TIME OF CONTRACTING with your client(s), you as the business owner and your client(s) had no idea that Covid-19 was a thing or that a pandemic could take over the world and shut down everything. That is why clients were able to cry “Force Majeure” and try to modify the existing contract with either a complimentary reschedule or try to cancel the contract.

As of now, Covid-19 is no longer unpredictable or unforeseeable. It's expected to be a concern for a while when it comes to scheduling and planning wedding or events. Because ‘unpredictability’ and ‘suddenness’ are factors in determining whether an event constitutes Force Majeure, Covid-19 is no longer a Force Majeure Event. Covid-19 is going to be a part of our lives for a while longer, even in a best case scenario. This means that if your county or state does shut down again due to the rise of Covid-19 restrictions, that is not entirely an unpredictable event, is definitely a possibility in the majority of people’s minds, and therefore no longer in the realm of Force Majeure.

My point here: don’t let your clients tell you Force Majeure is still at play. It's not. While judges would have considered the argument in March-May of 2020 (and maybe even potentially into the summer 2020), they are not going to entertain that argument now. 

Have another plan in place for if Covid-19 does impact your ability to perform your services or your clients’ ability to host their event. That would be ensuring you have a solid “Covid-19” policy outlined in your contract. Some of those solutions involve modifying your rescheduling policies, offering substitute services, allowing complimentary rescheduling or for a small fee, and plenty of others. Thus, in order to better prepare for events and services moving forward, be aware that Force Majeure is no longer going to apply and you should explore other avenues to make sure that you, your business, and your clients are all ready for the “what if shutdown occurs again” scenario pops up.

Links: 
What's Your 2021 COVID-19 Plan Blog

THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. EVERY SITUATION IS DIFFERENT & IS FACT-SPECIFIC. A proper legal analysis is necessary based on your location and contract. Consult an attorney in your home state for advice regarding your contract or specific legal situation.

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