We have all heard the expression “a deal’s a deal.” But sometimes a deal cannot be carried out due to forces outside of a party’s control. Florida law has long recognized potential defenses to the enforcement of a contract under those circumstances. One such defense is impossibility of performance, which is when uncontrollable circumstances make the contract impossible or impracticable to carry out.
Another defense is when an unpredictable “Act of God” such as a storm or an earthquake interferes with a party’s ability to perform.
A third defense is force majeure. A force majeure clause in a contract excuses performance where performing would be illegal, impracticable, or impossible. Force majeure clauses in contracts can be broader than the scope of impossibility and still be enforceable under Florida law, including those allowing foreseeable, as well as unforeseeable, events to excuse timely performance.
Frustration of purpose is another contractual defense that occurs when some outside actor does something to prevent a party from performing. Arguably, a border closure would be an example.
The bottom line is that there are defenses to enforcement of a contract due to circumstances beyond a party’s control. Certainly COVID-19 and the need for efforts to control it are well beyond anyone’s control.
Floridians are now faced with a maelstrom of events that potentially trigger the above defenses due to the coronavirus: such as sick workers, quarantined workers, interruptions to customers and supply chains, border closures, and government shut downs or lock downs.
We advise that you contact our attorneys for a review of your contracts, insurance policies, and business circumstances to evaluate whether you may have contract defenses attributable to the current pandemic. While we have not yet seen any published Florida cases directly applicable to COVID-19, it is expected there soon will be, and we can review those with you as well and discuss their application to your business.
