The Coronavirus’ impact is not limited to health. It is having a severe impact on our economy as well – What we will call the e-Corona infection.
As increasingly severe social distancing restrictions are imposed in efforts to curb the spread of the Coronavirus, the economic impact of the virus is becoming undeniable. As companies large and small begin to feel the impacts of the Coronavirus, they are naturally looking at their contractual obligations to determine they can enforce their rights, or modify their contract obligations. Under the new normal of an economy being halted by an e-Corona infection, we do not yet have a clear answer.
Most contracts do not specifically include language that addresses the effects of an e-Corona infection. There are, however, several well-established contract principles that may be triggered by an e-Corona infection.
Whether and how much relief from a contract can be obtained because of an e-Corona infection will be determined by the specific language of each contract. Well-recognized principles such as “force majeure”, acts of God, impracticality, or impossibility will all play a role in determining the impact of an e-Corona infection on your businesses contract obligations.
In addition, it is likely some form of legislative intervention will be passed in an effort to provide economic relief from e-Corona infections. The specter of legislative intervention, impact of existing contract principles, and practical economic realities as all businesses face e-Corona infections, is likely to create one of the most challenging legal environments for contract enforcement ever experienced.
As your business seeks to define how to respond to and recover from an e-Corona infection, a review of critical contracts, existing contract law, the impact of multiple legislative responses that are to come, and long term business strategy should be a central part of you decision making process.