COVID-19 is dramatically affecting businesses. Among the many questions that business leaders are asking are those related to contracts, such as the following:
Do I still have to perform under a contract during the COVID-19 pandemic?
Typically, no party to a contract can simply decide to stop performing under a contract, even during difficult times. The determination of whether a party can delay, or halt, performance entirely depends on the language in the contract itself. While language permitting unilateral termination does exist in many types of contracts (usually with a notice period of about 30 days or so), it is not very common. More often, the determination comes down to the existence of a “force majeure” provision, which discusses contract performance in the wake of “force majeure event”.