Before you sign a contract, it is important to negotiate certain key terms, including when it is possible to cancel the contract early or place it on hold. Many parties decide to include a force majeure provision, which allows parties to halt their obligations under an agreement due to acts of God or other major events. With the current COVID-19 pandemic impacting both people and companies across the United States, many parties might try to cancel contracts under this type of clause.
Can you cancel a contract based on a force majeure clause due to COVID-19? In many cases, the other party might try to argue that this pandemic does not qualify as a force majeure event. This type of disagreement can lead a party to seek damages for any losses they incurred if you canceled a contract. We might see numerous cases make it to court regarding this very issue.
In California, courts will not find it sufficient that an out-of-the-ordinary event occurred. Instead, to enforce a force majeure clause, the law generally requires that a party demonstrate the following:
- The event made it impossible or impracticable to fulfill the obligations under the contract without unreasonable expense
- The event was not reasonably foreseeable at the time the parties entered into the contract
- The canceling party made sufficient or reasonable efforts to perform under the contract
The courts will also look to the specific language of each contract when determining when force majeure might apply.
Seek Help from a Business Lawyer in Los Angeles County and Ventura County about Contract Disputes
If you have an arising conflict about a contract during this COVID-19 crisis, do not hesitate to discuss the matter with a contract disputes attorney at the Law Offices of Alan J. Carnegie, APC. Please contact us today – we serve both Ventura and Los Angeles counties.