Contract Lessons Learned from the Coronavirus Pandemic

Unfortunately, with the outbreak of the COVID-19, many businesses are scrambling to figure out what to do during this pandemic to minimize the impact it has on their business. Now is the time to dust off those contracts and see what they say! Ideally, your contracts include the following terms to protect you against situations like are occurring right now:

Force Majeure

This is a section in your contract that excuses the parties from performing obligations when a party cannot perform due to circumstances outside of their control. It’s important to not only review carefully how a force majeure event is defined, but also ensure you have a process around how the parties will handle this situation, such as meeting daily to discuss a solution. I also recommend including a right to terminate if the force majeure event continues for a period of time. If you are entering into an agreement with a critical vendor or partner, this can be essential!


Review the terms that describe how the parties can terminate the contract and any notice periods required. It is also important to determine whether the notice is required to be in writing and delivered in a certain manner per the notice section of the contract.

Effect of Termination

This section should summarize what happens in the event of a termination, such as delivery of products, return of confidential information, payment obligations upon termination and transition services, if required.

Dispute Resolution Process

Ideally your contract includes a process around how the parties will handle disputes, such as providing written notice to the other party and requiring the other party to respond within a certain time. If the dispute is not resolved within a particular amount of time, then you may want to require that the parties escalate to executives or the CEO. If the parties are still unable to resolve the dispute within a certain amount of time, then either party may proceed to either arbitration or filing a claim depending on the terms of the contract.

Governing Law and Jurisdiction

This section sets forth the State law that governs the agreement and the location of any claims or arbitration. The State law that you choose can have a significant impact on the outcome of the case and so you’ll want to choose a State that makes sense for your business, and you’ll want to ensure the jurisdiction is convenient.

It’s important to ensure you re-review your contracts on a regular basis to ensure they are tailored to your company and include the terms and conditions necessary to protect what you’re working so hard for. No one ever enters into a contract thinking that things will go wrong, but it’s essential to include terms to protect you just in case they do.

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