Do I Still Have To Honor Contractual Obligations During The Pandemic?
Force majeure, when it comes to contracts, means that if there are circumstances that are beyond a person’s control and are not foreseeable, that may alleviate or suspend the obligations of that particular party to that contract. They may have a real estate closing that is supposed to take place and the parties are unable to close because of logistics. One party may be able to cancel out or rescind the contract based upon the current health and economic climate. However, this is not a get out of jail free card in the civil arena. There has to be a logical and sufficient nexus or connection between the actual term that is unable to be fulfilled and the current state of the pandemic and the economic effects that it may have. Most contracts include language for acts of God and other natural disasters and provide some relief from complying with the terms.
We are corporate counsel for a property management company. Both from a member’s perspective and the association’s perspective, there are a tremendous amount of questions that have been presented to me in regards to what the association’s obligations and rights as far as closing down certain common areas to limit liability. There is also insurance to worry about. The insurer may say that in order to keep your insurance, you need to close down these facilities, even if there is not a statewide order to do so.
On the other side of that coin, you have members who pay assessments to be able to use those common areas. Most associations are not in a position to be able to refund those assessments. There also are associations that are restricting guests from coming in, which owners have a constitutional right to have. This is uncharted territory where you have civil liberties coming up against public safety, health, and welfare. There is this new kind of tension between the two and there is not a lot of case law on it because we have not had a pandemic of this level in the last 100 years. The courts are going to have some novel questions to answer. A lawyer’s job is to guide their clients as best as they can based on their experience, their knowledge of the statutes, and what has been done in certain analogous cases.
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