Alejandro Miyar, Associate, Berger Singerman, Miami

The impact of the coronavirus includes a major wave of significant commercial disputes. We are experiencing a worldwide health and business crisis where the world's economy, including general industry and business relationships at all levels, are being severely roiled by COVID-19. Contractual liability principles and our court system will be tested by coronavirus well into its aftermath.

By this stage of the novel coronavirus pandemic, businesses and legal practitioners should have scrutinized their contractual force majeure clauses (or a lack thereof). Whether COVID-19 qualifies as a force majeure event will usually depend on the language of the contract. A force majeure clause excuses performance of contractual obligations upon the occurrence of an unforeseen circumstance—and whether COVID-19's effects on performance will relieve a party of its obligations goes to the plain language of a contract.

Thus far, the troubles caused by COVID-19 for the travel, hospitality and entertainment industries are well known. Major American venues have been shuttered; elsewhere, Dubai's Emaar Properties declared a force majeure event to halt bookings at three hotels for more than five months beginning on March 15. Until the pandemic is contained, the list of relationships that will be strained and tested by COVID-19 is growing in real-time and all participants in our global economy are at risk.

According to international reporting, PetroChina, China's top gas producer and piped gas supplier has issued force majeure notices to avoid gas supply obligations—because the demands on gas supply have changed due to the virus. In the National Basketball Association, for instance, contract terms might be invoked to avoid guaranteed salary obligations leading to a very public collective bargaining dispute. Until the pandemic is contained, anyone can face contractual performance and liability problems because of interruptions caused by COVID-19.

All contracting parties should determine whether COVID-19 qualifies as a force majeure performance excuse under the contract, and review other requirements for providing notice of nonperformance under the contract or alternative means of performance. If a contract is silent as to a force majeure event, related legal doctrines governing the frustration of impossibility of performance could be available.

Parties should review their commercial contracts to determine:

• What is the contractual mechanism for declaring a force majeure event?
• When must notice of a potential delay or nonperformance be provided? If the contract is silent on notice, a notice of any delays or nonperformance should be provided as soon as possible.
• Does the contract provide for opportunities to extend or cure performance?
• Does it contemplate the exchange or recovery of additional consideration?
• What should a party do to mitigate its damages All parties to a contract must take reasonable steps under the circumstances to mitigate their potential damages, including securing alternative performance or seeking to avoid other obligations.

Indeed, given the global interrelationships in worldwide commerce, COVID-19's effects will be extraordinarily complex if the pandemic is not curbed as soon as possible. This is largely unprecedented territory for our courts tasked with evaluating reasonable commercial decisions in the wake of an unprecedented health crisis. In the wake of the Great Recession, legal precedent shows that American courts generally declined to apply a force majeure clause when governmental action affected the profitability of a contract, as opposed to precluding a party's performance. Market fluctuations and impacts on economic feasibility have generally been found by numerous American courts to not constitute a force majeure event depending on the terms of the underlying contract.

However, presently, COVID-19 demands that we shelter in place and is requiring an extraordinary governmental response on a worldwide scale. Expect parties to push beyond force majeure clauses with the growing number of business disagreements.

Individuals and businesses should be mindful of the importance of maintaining valuable business relationships—especially during and after uncertain times. Crisis demands a careful response and competent counsel because where performance interruptions occur, the expectations of contracting parties are frustrated, and disputes ensue. This is our new reality.

Alejandro Miyar is an associate at Berger Singerman in Miami.