Commercial Business Challenges during the COVID-19 Pandemic
COVID-19, Business Interruptions, Delays in Real Estate Development, Commercial Lease Disputes and that Obscure Phrase, "Force Majeure"
What you need to know to help your business or project during the COVID-19 pandemic.
The numerous governmental orders that have been issued (and which we anticipate will continue to be released) impact nearly every business's ability to meet its contractual obligations:
- For businesses that rely on commercial leases, classifications of what is an "essential business," as well as "shelter-in-place" orders, are directly affecting your tenants' abilities to remain "open for business," in addition to meeting their rental and CAM obligations.
- Suspension or delay of permit reviews, required testing, and the ability to obtain necessary administrative approvals and special exceptions may have stymied your project development.
- These same suspensions or delays threaten your supply lines and your sales contracts, as restrictions on the transportation of goods delay shipments in and out of certain geographic areas. This may greatly impact your ability to obtain needed materials and in turn, to service your customers' needs.
- And the list goes on!
Whatever your own business challenge, it is critical to understand your options, to evaluate how you will respond to those challenges, and to implement plans to both protect your business and respond to claims and requests for accommodations from the other side.
Those requests may come in the form of rental reductions, or rent suspensions; extensions of time to perform; adjustments in contract pricing or contractual delivery schedules.
The Obscure Phrase, "Force Majeure" Is Now Being Used Widely
You may have already received a notice that the opposing party is seeking to excuse its non-performance based on "force majeure" provisions, or perhaps claiming that they should be excused from their contract obligations, based on "impossibility of performance," etc.!
"Force majeure" means meaning "superior force"; in law, it is a clause in contracts that frees one or both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, epidemic or an event described by the legal term "act of God" (hurricane, flood, earthquake, volcanic eruption, etc.), prevents one or both parties from fulfilling their obligations under the contract.
In practice, most force majeure clauses do not excuse a party's non-performance entirely, but only suspend it for the duration of the force majeure, and force majeure is generally intended to include occurrences beyond the reasonable control of a party.
You may very well ask yourself, in this case, "What am I to do?"
Brown, Brown & Young, P.A. can assist you during this crisis. We can help you address issues precipitated by the Coronavirus pandemic, assist you in designing strategies to preserve your business, and to protect your rights when another party suggests that it is excused from performance due to force majeure, the pandemic and/or a governmental order.
Please call our main numbers — 410-838-5500 or 410-879-2220 — or select this link for further details regarding communications with our real estate, business and commercial attorneys.
IMPORTANT DOCUMENTS to Assist You in This Crisis (in PDF format and as web pages):
- PDF: A COVID "TO-DO" List — General Guidance for Businesses;
Same Document as Web Page
- PDF: Preparing for the Day When the State of Emergency Is Lifted;
Same Document as Web Page
Let us know how we can be of any assistance to you during this very unusual and difficult time.