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Legal Help for Small Business Owners

Annie Kruise  | Published on 4/3/2020

Review your agreement for force majeure clauses – Force majeure clauses may be triggered when extraordinary events, sometimes called Acts of God, prevent a party from being able to fulfill its contractual obligations. Monitor the changing condition of the crisis and make note of government declarations and states of emergencies that making performance of your obligations impossible. Be aware, though, that an increased cost to perform your obligations or the likelihood of a poor performance may not be enough to invoke a force majeure clause.

Consider having an insurance specialist review your insurance policies – Your agreement may require that you carry business interruption insurance or other coverage's that may apply to the presence of COVID-19. Review your policy for language about communicable or infectious diseases, or conversely, exclusions related to virus-related losses. It is best, if possible, to have an independent third party review the policy, rather than your broker or insurance company.

Consider sitting back down at the table – You and the other party to the agreement may be able to discuss whether there are alternative means to perform contractual obligations. The other party may be amenable to adjust performance under the circumstances, including extended deadlines or partial performance of obligations.

*Please note that contractual clauses can be interpreted differently, so it is important to discuss your situation with an attorney, whether you are seeking to enforce or excuse performance under your contract.

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