Ask an Expert: 5 Things a Lawyer Wants You to Know About Force Majeure Clauses and COVID-19
We’ve been spending a lot of time at Create & Cultivate HQ discussing how we can best show up for and support our community during this uncertain time. Community is at our core, and connecting with others through one-of-a-kind experiences is what we love to do. While the world has changed, our mission has not. We’re committed to helping women create and cultivate the career of their dreams, which is why we’re proud to announce our new Ask an Expert series. We’re hosting discussions with experts, mentors, and influencers daily at 9 am, 12 pm, and 3 pm PST on Instagram Live to cure your craving for community and bring you the expert advice you’ve come to know and love from C&C. Follow Create & Cultivate on Instagram, check out our Ask an Expert highlight reel for the latest schedule, and hit the countdown to get a reminder so you don’t miss out!
Photo: Courtesy of Jamie Lieberman
Not to state the obvious, but talking to a lawyer can be intimidating. Between tracking down the right lawyer, budgeting for a consultation, and knowing which questions you need to ask, seeking out legal counsel can be daunting for a lot of small business owners. With that in mind—and given these unprecedented times—we asked an attorney to answer all your burning questions about force majeure contract clauses in the wake of the COVID-19 pandemic.
In this installment of our Instagram Live series, Ask an Expert, we tapped Jamie Lieberman, a seasoned attorney and the founder of Hashtag Legal, to discuss everything you need to know about force majeure clauses right now. Read on for five things you should know about getting out of a contract due to unforeseeable circumstances. If you missed the conversation, you can watch it in full here, and be sure to tune into our next Ask an Expert conversation on Instagram Live.
1. First things first, what is a force majeure clause anyway?
“It is a clause that’s written into many contracts that allows a contract to be canceled or postponed due to impossibility performance, which can be caused by things like natural disasters, strikes/riots, or ‘acts of God.’ Things that make it impossible for people to perform their obligations.”
2. What exactly is considered an act of God by a force majeure clause?
“Usually, an act of God includes natural disasters; hurricanes, floods, tornadoes. Illness is not always in the definition of force majeure. If you have a contract that you’re not sure about, you check whether or not there’s a force majeure clause in it and how it’s defined. Some contracts allow for cancellation and some just allow for postponement.”
3. What if I don’t have a force majeure clause in my contract?
“There are a number of ways you can be protected whether or not you have force majeure in your contract. If the purpose of the contracts is frustrated, meaning there’s no way for you to do it, you can be protected by the doctrine of impossibility or impracticability. If you can’t perform your contract, have that conversation with your client and see what you can do to postpone. Have a negotiation, have a conversation.”
4. What can I do if someone is trying to get out of a contract and I don't have a lawyer?
“Have the difficult conversations—don’t avoid them. Start negotiating and try to make new agreements so that you can move forward and both parties are protected. The worst thing you can do is avoid having these conversations.”
5. Do I need a contract?
“If there is anything of value being exchanged, whether it’s money, goods, or services, having a contract is a best practice. Contracts are meant to protect both parties—they’re not designed to favor one party or the other. And if you have everything in writing, you know what will happen in the event of something like the COVID-19 outbreak.”
About the Expert: Jamie Lieberman, owner and founder of Hashtag Legal has been a practicing lawyer for nearly 15 years. As an experienced entrepreneur, Jamie understands the unique needs of business owners at different stages in their organization’s growth. She has a deep commitment to making legal accessible and regularly speaks about legal matters, the art of negotiation and entrepreneurial topics at events such as Alt Summit, Podcast Movement, and FinCon and as an expert source for media like Digiday and Forbes. You can also catch her as a co-host on The FearLess Business Podcast.