Unexpected Breach of Contracts

unexpected breach of contracts

Since the onset of COVID-19 in 2020, businesses have been forced to think about the problem of unexpected or unavoidable breaches of contracts more often than ever. A contract gone bad can destroy a company through substantial claims for damages or loss of reputation.

Certain doctrines of contract law excuse the non-performance of a contract owing to forces beyond the parties’ control. These legal doctrines fall under the general heading of force majeure after the French term “Superior Force.”

Force Majeure Law

Occasionally, some cannot perform contracts because of circumstances beyond the parties’ control, events that cannot be foretold when businesses enter into a contract. Such events are sometimes described as “Acts of God.”

In general, contract law allows businesses to consider such acts of God in devising contract terms. The parties can stipulate what will happen if acts beyond the control of either business impede the completion of the contract. Even if the parties do not institute such a force majeure clause, the courts will sometimes excuse the performance of a contract because of disaster or unforeseen events.

Examples of Force Majeure

Some examples of force majeure excusing performance include weather events like tornadoes or hurricanes, which cause extensive damage to facilities or worksites. An earthquake or civil disorder like riots or strikes might also qualify as force majeure, as would warfare.

The occurrence of a catastrophe is insufficient to trigger a force majeure clause, or the application of the doctrine, by itself. The event has to be directly related to the performance of the contract.

In other words, one or the other parties to the contract must be prevented from completing their side of the bargain because of the disaster. The burden is on the non-performing party to show that failure to perform was due to the unforeseen disaster.

Thus, while COVID was a serious epidemic across much of the world, a party would have to demonstrate that they could not perform the terms of their bargain because of it and that they could not reasonably foresee the event.

How Does It Affect Your Breached Contract?

Many contracts spell out the circumstances that constitute God’s actions that might prevent performance. Such clauses also set forth the responsibilities and allocation of risks that arise should the term come into play.

In Pennsylvania, if a contract includes a clause specifying which events constitute force majeure, then courts will probably consider only those events qualifying under the doctrine.

Force majeure clauses, acts of God, and impossibility defenses are often litigated, and it is usually a good idea to consult an attorney before making such a claim.

If you are a business confronted with such a claim by a client, contractor, or business supplier, it is also a good idea to take legal counsel as soon as possible. Even without a contractual clause, courts will sometimes allow for an impossibility defense or a commercial impracticability defense, codified under 13 Penn. C.S. Section 2615. Courts tend to define these exceptions narrowly.

Hire a Business Attorney in Bucks County, PA

If your business is confronted with contract questions arising from force majeure or impossibility of performance or any other matters of business law, you should consult a business attorney in Bucks County PA, for solid advice on the issues confronting you. For almost five decades, the Olen Law Office has provided clients in greater Philadelphia and Bucks County, Pennsylvania, with conscientious and professional legal service. Our lead attorney, Elliot Mark Olen, has practiced as a Bucks County business attorney since 1978. Call the Olen Law Office today for an appointment.