22 Mar Impacts of COVID-19 on Legal Rights and Obligations
Legal Rights in the Event You Can’t Meet Contractual Obligations Because of COVID-19
Anyone that has contractual obligations and can’t fulfil these obligations because of the COVID-19 pandemic should consult with a lawyer about their legal options.
An example of a party that may not be able to meet their contractual obligations in a contract are restaurants that lease commercial premises and cannot pay rent because their restaurants are closed as a result of the COVID-19 pandemic. One legal remedy that may be available is what’s called a “force majeure clause”, which is a common clause in written legal contracts that protects the parties in a contract against extraordinary or unforeseen events.
Force Majeure (or “acts of God”)
These unforeseen or extraordinary events are referred to as “acts of God”, for example a hurricane, war, political unrest, quarantine, pandemic, etc. A force majeure clause in a contract is intended to relieve a party (temporarily and in some cases permanently) from fulfilling part or all of the party’s obligations in the contract because of the extraordinary or unforeseen event.
If your contract does not contain a force majeure, the courts may still consider other defences in law available to a party who is sued because they are unable to fulfil their obligations in the contract because of an unforeseeable event beyond its control, such as the COVID-19 pandemic.