Another type of difficult case will be when the benefit is legally possible, perhaps because a state`s stay-at-home order has expired, but the pandemic continues to prevail. For example, in the babysitter example above, the babysitter should be excused if the order to stay home expired yesterday, but she is concerned about her health when it comes to babysitting? If the babysitter is eighty years old and therefore at particular risk of contracting COVID-19, 26Open this footnote Close this footnote 26 people at higher risk of serious illness, Ctrs. for Disease Control & Prevention, perma.cc/J4PC-4L46 (last updated May 14, 2020) (“Based on currently available information and clinical expertise, of seniors and people of all ages, who have severe underlying conditions, have a higher risk of severe COVID-19 illness. »). Open this close footnote, then a court would probably excuse you on the basis of impossibility. The physical danger of babysitting during the COVID-19 pandemic is so much higher than expected that their performance would be excused as effectively impossible. In fact, many people argue quite bitterly over all sorts of contracts, from weddings and conferences to leases and industrial production. Many leaders will be able to cope with the impact of COVID-19 on their contractual obligations. A global pandemic is an unpredictable circumstance, and contract managers must determine whether they should perform their contracts or whether they can invoke force majeure – a clause that recognizes events that are beyond anyone`s control and could prevent them from complying with contractual agreements. If a baseball glove manufacturer requires an expanded force majeure clause that includes pandemics, its buyers may only offer $8 per glove, rather than the $10 per glove they paid in the past. 54 Open this footnote Close this footnote 54 In extreme cases, the buyer could even walk away from the store and find another supplier who promises to perform regardless of the difficulties. See, for example, Carpenter Paper Co. v.
Kearney Hub Pub. Co., 78 N.W.2d 80, 82 (Neb. 1956) (the president of the news agency testified that he had switched from one newsprint supplier to another because he had promised to deliver paper, “come hell or flood”). Open this footnote Close It might be a good idea to accept the lower price – or not. It depends on the chances of a pandemic in a given year, as well as the cost of other alternative ways for the manufacturer to protect themselves. If the manufacturer can purchase insurance that covers contract damage for $1 per glove, it seems advisable to use the same old force majeure clause, get the total price of $10 per glove, and purchase insurance for $1 per glove. This way, it would get the same protection and also a higher price ($9 per glove). But what if the insurance company goes bankrupt and doesn`t pay when you need it? This is another risk that must be taken into account. Ultimately, there is no simple legal answer to pandemic risk – rather, it is a nuanced decision that requires commercial judgment. 55Open this footnote Close this footnote 55 See Rufus Calhoun Young, Jr. & Dwight H.
Merriam, Commentary, Homeland Security Begins at Home: Local Planning and Regulatory Review to Improve Security, Land Use L. & Zoning Dig., Nov. 2003, p. 3 (2003) according to how and to whom this risk should be attributed. »; (Emphasis added)). According to the “Commercial Judgment Rule” of company law, the commercial decisions of the Board of Directors “are not disturbed if they can be assigned to a rational commercial purpose. In such circumstances, a court will not replace its own ideas about what constitutes or is not an informed commercial judgment. See Sinclair Oil Corp. v. Levien, 280 A.2d 717, 720 (Del.
1971). Open this footnote Close The business impact of the novel coronavirus prompts lawyers to re-read the “force majeure” provisions in contracts, but they tend to be completely unclear and generally do not point to a public health crisis or widespread illnesses, infections, or pandemics as excusable events. Manatt`s lawyers say creative arguments and legal advocacy will be essential to create the best interpretation of the provision. One issue that many companies face is whether commercial contracts can be terminated due to a breach and, depending on how that termination is done, whether it could result in claims for loss and damage. COVID-19 is having a significant and detrimental impact on businesses and their ability to fulfill their contracts. Many epidemiologists have speculated that a second wave of infection could occur later this year. In this case, your organization must be prepared. A contract management tool is crucial because you make the necessary transformations not only to keep the business running, but also to protect your business from future disruptions that could impact your contractual obligations. The doctrine of impossibility is narrow in scope and is rarely applied, as it undermines the nature of a contract as a legally enforceable promise. 6Open this footnote Close this footnote 6 Kel Kim Corp. v.
Cent. Mkts., Inc., 519 N.E.2d 295, 296 (N.Y. 1987) (with the conclusion that the doctrine of impossibility has been “applied narrowly, in part on the basis of judicial recognition that the purpose of contract law is to spread the risks that could affect performance and that performance should not be excused than in extreme circumstances”). Open this footnote Close If courts regularly exclude parties from their contracts when performance is more difficult than expected, the parties would lose confidence that contracts are truly legally enforceable.
