Common Issues to Expect in Pandemic-Related Contract Disputes

Common Issues to Expect in Pandemic-Related Contract Disputes

At M. Ross & Associates, LLC, we are committed to helping clients who are dealing with contract disputes arising from the COVID-19 pandemic. A variety of businesses and industries will need skilled and experienced legal representatives to handle complex litigation matters in both courts and arbitral tribunals. Contract disputes were already difficult to navigate before the pandemic, which is why parties with contracts affected by COVID-19 must become familiar with common issues they might encounter.

Failure to Perform

Legal experts predict that contract disputes related to COVID-19 will focus on if the pandemic or effects related to the pandemic are a valid reason for why the nonperforming party breached the contract. Underlying contracts in these disputes will often have provisions concerning unforeseeable events that may prevent or impede the performance of contractual duties.

An example of these provisions is a force majeure clause, which can release the breaching party from liability if certain unforeseeable events beyond the party's control occur. When it comes to contacts for loans, real estate, or leasing agreements, some state that a "material adverse event" or other forms of "hardship” qualifies for renegotiation or termination of the agreement.

What Is a Triggering Event?

Litigation for pandemic-related contract disputes will also determine if the “triggering event" in question can be considered an occurrence that excuses nonperformance. Nonperforming parties will be claiming the pandemic or certain government restrictions, or even both, should excuse their breach.

If the contact was created after initial reports of the pandemic, then you can expect parties to argue over whether the pandemic or government action was sufficiently "unforeseeable" to count as a triggering event.

If the contract was created before the pandemic was reported, nonperforming parties will obviously claim that this qualifies as an unforeseeable occurrence that was beyond their control. Contracts with force majeure provisions will generally sate that “epidemics" or "acts of government" are beyond the party's control.

Proving Causation

Nonperforming parties will need to prove that the triggering event was the "proximate cause" of their inability to perform contractual duties. A valid defense will include the following elements to establish proximate cause:

  • A direct causal link between the triggering event and nonperformance
  • How the nonperforming party conducted its due diligence to avoid the effects of the triggering event
  • Which reasonable alternatives were exhausted by the nonperforming party

Consult with Our Business Litigation Team Today

If you are anticipating a contract dispute because your business contracts were impacted by COVID-19, please don’t hesitate to get in touch with our law firm so we can assess your situation and get started building a strong legal strategy to protect your best interests.

Give us a call today at (201) 897-4942 to schedule your appointment.

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