Breaking Contracts Due to Covid 19

As the COVID-19 pandemic continues to disrupt businesses around the world, many companies are struggling to meet their contractual obligations. In some cases, this has led to the need to break contracts. However, before taking this step, it’s essential to understand the legal implications and potential consequences.

Breaking contracts due to COVID-19 can be a complex process, requiring legal guidance and careful consideration. In many cases, the pandemic has been deemed a force majeure event, which means that it is an unforeseeable circumstance beyond a party’s control that makes performance under a contract impossible or impracticable.

If your business is facing financial hardship due to COVID-19 and you are unable to fulfill your contractual obligations, your first step should be to review your contract’s force majeure clause. This clause outlines what constitutes a force majeure event and what steps both parties must take in the event of such an occurrence.

If your contract does not include a force majeure clause, you will need to rely on common law principles to determine whether the pandemic constitutes a force majeure event. This can be a complex process, and you should seek legal advice before taking any action.

Breaking a contract due to force majeure does not automatically release you from your obligations under the contract. You will need to provide notice to the other party, outlining how the pandemic has affected your ability to fulfill your obligations and what steps you have taken to mitigate the impact.

If you are unable to reach an agreement with the other party, you may need to seek legal advice on the best course of action. This may involve negotiating a new contract or pursuing legal action to terminate the existing one.

In conclusion, breaking a contract due to COVID-19 can be a challenging and complex process. It’s vital to seek legal guidance and carefully consider the potential consequences before taking any action. With the right support, however, it may be possible to navigate this difficult time and emerge with a stronger, more resilient business.