Two preliminary considerations:
- If you can conduct your business online and you have no contractual obligations for in-person services, this still may apply to you since this may impact how your client is excused from their obligations.
- Hopefully you have a contract, insurance, and an LLC/Corp, as I talk about how to use them during this time. If you don’t, there are always other things that can be done.
The effects of the coronavirus outbreak are widespread among obvious industries (travel, tourism, places where people like to bump and grind (going to a nightclub anyone?) But what about the more insidious yet equally catastrophic impact it may have on your small business?
The question is: to what extend does the coronavirus outbreak excuse your business from your contractual obligations?
- First and foremost, what does your contact say? What provisions are there regarding frustration of purpose, impossibility, impracticability, choice of law, force majeure, and fundamental changes in circumstances? know exactly what your contract says, and what it means. Without a contract, you are not easily covered in these circumstances.
- Does your business insurance policy cover the outbreak or its direct and indirect effects? Make sure you comply with notice requirements and other preconditions to insurance protection.
- Keep a detailed record of communications with your client regarding how the coronavirus may be impacting the services you perform, which can later mitigate the risk surrounding liability disputes.
- Amend your contract: is there a commercially resolution given the circumstances?
In general, a party directly affected by the coronavirus would have to show that the outbreak falls within the scope of the contractual provisions and are construed under the governing laws of that contract.
But let’s stop the legalese here for a second and understand that usually epidemics, pandemics, and a lot of other “emics” are not usually thought about ahead of time. Hopefully we can all work together as a community to figure out what is fair and reasonable during the circumstances of this unprecedented event.