Force Majeure: The Effect of COVID-19 on Contracts

As we roll into a second month of stay-at-home orders triggered by the COVID-19 pandemic throughout Texas, the commercial real estate industry is beginning to fully feel the impact. Non-essential retailers have been forced to shut their doors, in some cases eliminating all potential for revenue. Those employees, furloughed or laid off, face a similar dilemma: how do you pay your mortgage or rent when no money is coming in? The answer for some is to turn to the “force majeure” clause of their contract if they negotiated one. “Typically a force majeure clause has been something that people don’t pay much attention to. It’s one of the boilerplate paragraphs toward the end of the contract,” said David Groff, a shareholder with Wilson Cribbs + Goren, a 20-attorney law firm that focuses on commercial real estate. “That doesn’t mean it’s any less important than any other provisions in the lease, but it sometimes doesn’t get the attention it requires because people get so comfortable for so long.” First, have a conversation with tenants about the state of their business and review their
contract. “Not every lease is going to be the same. Not every interaction between landlord and tenant will be Joined by senior partner Scot Clinton, the pair offered insight into what force majeure is, how courts have responded to it and how both tenants and landlords can respond during REDNews’ April 9 webinar on the topic. “The gist to identify specific types or categories of events that will relieve parties of their duty to perform. In Texas, the general approach to interpreting a force majeure clause, if there is one, really does boil down to the actual terms of the clause,” Clinton explained. Click to read more at