The COVID-19 pandemic has brought many unforeseeable challenges to businesses and individuals worldwide. With lockdowns, quarantines, business closures, and travel restrictions, contractual obligations and agreements have been disrupted, and many parties are left wondering what rights they have in the situation of contract cancellations due to COVID-19.
Firstly, it is essential to understand that in most cases, contract cancellations due to COVID-19 will be based on what is written in the contract. If the contract contains a force majeure clause, parties may invoke that clause to excuse performance due to circumstances outside their control. Force majeure means “act of God” in French, and it will typically include events such as pandemics, epidemics, government orders, and other unforeseeable disasters.
However, not all contracts may contain a force majeure clause, and parties may need to rely on common law or statutory defenses, such as frustration of purpose or impossibility of performance. Frustration of purpose occurs when the reason for a contract can no longer be achieved due to unforeseen circumstances, such as a government mandate that requires the cancellation of a wedding contract. Impossibility of performance occurs when it is entirely impossible to fulfill a contract obligation, such as an international travel ban that prevents a performer from attending a concert.
In most cases, parties will need to provide evidence that they have exhausted all other options to fulfill their contractual obligations before invoking a contract cancellation due to COVID-19. This may include providing evidence that they have tried to negotiate an extension of time or alternative performance locations.
It is also crucial for parties to understand the notice and other procedural requirements that may be required by the contract or applicable laws. Failure to comply with these requirements may result in the loss of rights or remedies that may otherwise be available.
In conclusion, contract cancellations due to COVID-19 can be complex and require careful consideration of the contractual and legal requirements. Parties should seek legal advice and review their contracts carefully to understand their rights and obligations. It is also essential to maintain communication and negotiate with the other party in good faith to find an amicable resolution that works for all parties involved.