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Breach of Contract During the COVID-19 Pandemic

From closures of schools to shelter-in-place orders, the COVID-19 pandemic has radically changed the way Americans live. In these unprecedented and ever-changing times, life seems to stop as quarantine gets stricter and more widely enforced. However, even if it feels that our everyday lives have come to a halt, obligations such as contracts still continue. If you are a business owner who has been dealing with the short end of the stick due to COVID-19 lockdown orders, you may find that it is increasingly difficult to uphold your contractual obligations. When faced with this situation, be aware that your financial situation is not completely doomed. Due to these unique circumstances, you may be able to avoid civil liability even if you do not fully uphold your contractual obligations.

Consequences of Breach of Contract

If you have breached a contract due to non-performance, the severity of the consequences depends on the terms of the contract. The other party in the contract can also sue you for failing to uphold your side of the contractual terms. You may be expected to pay for monetary damages, face rescission, deal with reformation, or undergo specific performance as a remedy. As stated previously, the consequences of the breach of contract depend on your specific contract and the desires of the other party in the contract.

Possible Defenses for Breach of Contract

A breach of contract during a pandemic like COVID-19 can be justified using various defenses. Depending on the situation and the specificities in a contract, defenses such as force majeure and impossibility of performance can be used.

  • Force Majeure: French for “superior force,” the force majeure clause is a defense that is used to excuse a party from fulfilling their contract due to unforeseeable happenings. The unforeseeable happening is typically an unavoidable Act of God that makes it impossible for the party to stay true to their contractual terms. However, a force majeure clause can only be used if it has been specifically mentioned within the contract that was breached.
  • Impossibility of Performance: Impossibility of performance is when a party cannot fulfill their contractual obligations because of inevitable circumstances that are out of their control. If an event occurs that renders the party completely unable to fulfill their part of the contract, the impossibility of performance defense may be used. For impossibility of performance to count however, it must be humanly impossible for the duties to be fulfilled.

What to Do if You Have Breached Your Contract

If you have breached your contract due to the difficult situations that the COVID-19 pandemic has brought, consult an attorney as soon as possible. Your economic situation is not ruined, and an experienced lawyer can help relieve your burdens. The COVID-19 pandemic is an unprecedented happening that has made life significantly harder for many. As a result, you have defenses that can protect you from bearing the full responsibility of contract nonperformance. Depending on your contract, you may have ways to avoid civil liability for your breach of contract.

If you are interested in receiving professional legal guidance for contract non performance, our skilled team of civil litigation attorneys at SAC Attorneys LLP are here to help. To schedule a free consultation with us, please do not hesitate to call us at (408) 441-7500 or contact us through our website today.

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