Unavoidable Delays

The COVID-19 virus has caused the WHO to declare a global pandemic. The labeling of this virus has contractual implications as well. Many franchise agreements and lease agreements have a clause that is activated in these situations. The clauses can be called an Act of God, Force Majeure, or even Unavoidable Delays. Blacks Law Dictionary (5^th Edition) defines Act of God as “An act occasioned exclusively by violence of nature without the interference of any human agency… It is an act, event, happening, or occurrence due to natural causes and inevitable accident or disaster…”

What is common to all these clauses is that it forgives either party for not performing their contractual obligations for the duration of an ongoing unavoidable and perceivable (at the time of signing the contract) event. Usually, these clauses list several different instances of what constitutes such an event and may include an epidemic or pandemic as well. In such situations, the contract is clear and does not leave room for interpretation. If such explicit language is not included in the clause, it would be advisable to consult with an attorney who knows the case law in your jurisdiction about the definition of the clause.

It is essential that in times of uncertainty that each party understands their rights and obligations. This, in turn, will prevent the opportunistic tendencies of the other party, for instance, to require rent (lessor) or royalty payment (franchisor) when the lessee or franchisee is not required to pay it for the time being.

For more information about your rights, contact franchise attorney Mario Herman. Strive so that no one takes advantage of this situation to your detriment.