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Force Majeure in Business Disputes in the Age of COVID-19

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One of the six flags that has flown over Texas was that of France, from 1685 to 1690.  Another brief period of French history that has made an impression on the history of Texas was the reign of Napoleon Bonaparte in the early 19th century.  Napoleon’s legal reforms, with their emphasis on a clearly written legal code accessible to everyone, had a long-lasting influence outside of France.  One important legal concept which United states law has adopted from the Napoleonic Code is the concept of force majeure.  Whether or not your existing business agreements contain force majeure clauses, and how those clauses are worded, could have a major impact on what your business needs to do to survive the economic effects of the COVID-19 pandemic.  If you are involved in a business dispute involving a force majeure clause, contact an El Paso commercial litigation attorney.

What Is a Force Majeure Clause?

Breach of contract is a major cause of legal disputes in business.  Whether the contract is between two business partners, an employer and employee, or a vendor and a client, or a landlord and a commercial tenant, if one party does not uphold their contractual obligations, the other one suffers financial losses, and disputes often ensue.  To protect against these costly lawsuits, many business contracts contain force majeure clauses.

“Force majeure” is a French phrase that dates back to the Napoleonic era and means “superior strength.”  A force majeure clause states that it does not count as breach of contract if the reason that one party cannot fulfill its contractual obligations is because of some unforeseeable event that causes large-scale disruption.  Force majeure events are sometimes called “acts of God,” even though they can include both natural and human-made disasters.  Examples of force majeure events include hurricanes, extended heatwaves, wars, labor strikes, or even extensive and long-lasting Internet outages.

Texas law will not allow you to use a force majeure defense if you fail to meet a contractual obligation, unless your contract explicitly contains a force majeure clause.  If the COVID-19 pandemic prevented you from fulfilling your contractual duties, you might be in a safer position if you used the defense that the force majeure event that prevented you from holding up your end of the agreement was an “act of a government authority.”  In other words, do not try to blame the virus itself.  Instead, use the defense that the pandemic-era regulations made it impossible to conduct business, raise funds, or obtain supplies the way you were able to do before the pandemic, when you signed the contract.

Reach Out to Us Today for Help

Especially in the age of COVID-19, there is no one size fits all way to invoke force majeure about pandemic-related disruptions.  A Brownsville commercial litigation attorney can help you choose the best course of action.  Contact Colvin, Saenz, Rodriguez & Kennamer, L.L.P. to discuss your business dispute or inability to fulfill contractual obligations.

Resource:

natlawreview.com/article/force-majeure-under-texas-law-time-covid-19

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