Description

COVID-19 has upended the operations of countless California businesses. As fallout from the pandemic continues, many companies face uncertainty regarding their contractual obligations and whether they or their counter parties have any legal basis to excuse or delay performance in light of the pandemic. Contractual force majeure clauses and the doctrines of commercial frustration and impossibility are defenses that are likely to arise with regularity. Although each contract will have its own unique issues that should be considered in assessing the parties’ rights and obligations, below is a basic discussion of these defenses under California law. Please note, however, that as with many situations in the current environment, federal, state, and local legislation or other orders are being implemented almost daily and may otherwise modify the discussions.

What is Force Majeure?
Many real estate contracts contain a “force majeure,” or “act of God,” provision that excuses a party’s performance of certain obligations if a specified event – such as war, earthquakes, strikes, or governmental shutdown – occurs. California courts may excuse a party’s non-performance of a contractual obligation if such an unforeseen event occurs and prevents the party from performing.

 Find out more about what this is and how it impacts your business.

SPEAKERS:
Cathy T. Moses, Partner, Cox, Castle & Nicholson LLP
Alicia N. Vaz, Partner, Cox, Castle & Nicholson LLP