The Coronavirus and Force Majeure Clauses in Contracts – SALCINESLAW

With the Coronavirus (COVID-19) taking over the country and businesses, businesses are now seeking to determine whether they are obligated to perform under their contracts, or whether they can invoke a force majeure clause to excuse performance temporarily or even permanently.

Force Majeure Clauses Generally

Not all contracts contain force majeure clauses and even if they dont, there are still protections afforded by law. The force majeure clause is a contractual provision which excuses one or both parties’ performance obligations when circumstances arise which are beyond the parties’ control and make performance of the contract impractical or impossible.[1]

Force majeure events typically enumerated in contracts include:

  1. acts of God, such as severe acts of nature or weather events including floods, fires, earthquakes, hurricanes, or explosions;
  2. war, acts of terrorism, and epidemics;
  3. acts of governmental authorities such as expropriation, condemnation, and changes in laws and regulations;
  4. strikes and labor disputes; and
  5. certain accidents.[2] Economic hardship typically is not enough to qualify as a force majeure event on its own.[3]

Determining whether a force majeure clause can be invoked depends on the specific language of a contract. Generally, force majeure clauses are confined to situations of the kind or nature which limit damages in a case where the reasonable expectation of the parties and the performance of the contract have been frustrated by circumstances beyond the control of the parties.

State Specific Requirements for Force Majeure Clauses: Florida

The CDC defines an epidemic as an outbreak of disease that infects communities in one or more areas, and a pandemic is an epidemic which spreads across the globe. If a contract at issue lists epidemics or pandemics as a force majeure event, the claiming party could argue that the coronavirus qualifies in light of the fact that is has been officially declared a pandemic by World Health Organization.

If a force majeure clause does not list epidemic or pandemic as a triggering event, it is possible that the coronavirus could be covered as an act of governmental authority in some areas, given that many governments, including the United States government, have instituted lockdowns to prevent the spread of the coronavirus.

If a listed force majeure event occurs, however, there is still further analysis required to determine whether invocation will be successful.

Under Florida law, a party seeking to invoke a force majeure clause must show that the force majeure event was unforeseeable, and that the force majeure event occurred outside the party’s control. This means that the claiming party must show that the event could not have been prevented or overcome, and there additionally cannot be any fault or negligence on the part of the claiming party.

Some contracts additionally require that the claiming party give the other contractual parties notice before invoking a force majeure clause. If the claiming party does not give proper notice as set forth in the contract, it could preclude successful invocation of a force majeure clause.

Businesses seeking to invoke the force majeure clause of their contracts likely have a strong argument that the coronavirus outbreak is an unforeseen event, unless the parties entered into the contract after the outbreak of coronavirus. Whether businesses have also attempted to perform their contractual duties despite the coronavirus outbreak, and whether that is even required under a particular contract are questions that must be assessed on a case-by-case basis.

Other Options: Impossibility/Impracticability and Frustration of Purpose

If a party is unable to successfully utilize a force majeure clause to excuse performance during the coronavirus outbreak, or if a contract does not contain a force majeure clause, other options may still potentially be available to excuse performance, such as the defenses of impossibility and impracticability. The Uniform Commercial Code (UCC) provides that a seller is excused from performing under a contract when “performance as agreed has been made impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid.” The Restatement (Second) of Contracts defines impossibility as “not only strict impossibility but impracticability because of extreme and unreasonable difficulty, expense, injury or loss involved.”

If a contract does not contain a force majeure clause, and an impossibility or impracticability defense fails, another possible defense for a party unable to fulfill its obligations under a contract due to the coronavirus is frustration of purpose. For the doctrine to apply, “the frustrated purpose must be so completely the basis of the contract that, as both parties understood, without it, the transaction would have made little sense. ”Put differently, frustration of purpose occurs where “a change in circumstances makes one party’s performance virtually worthless to the other, frustrating his purpose in making the contract.” Business should be mindful, though, that economic hardship such as an increase in the cost of performing under a contract is not enough to assert a frustration of purpose defense.

Conclusion

The coronavirus is having a significant and harmful impact on businesses and their ability to perform under their contracts. However, whether a claiming party can successfully invoke a force majeure clause, an impossibility/impracticability defense, or a frustration of purpose defense in order to excuse performance due to the coronavirus is a fact intensive inquiry and must be assessed on a case-by-case basis. Contractual parties must look to the specific language of the contract, including the applicable law, to determine their likelihood of success.


At the Law Offices of Jacqueline A Salcines PA we are here to help. With over 21 years experience interpreting contracts and practicing business law. the best defense is to hire the right lawyer. Let our experience go to work for you. We can assist virtually, by phone, facetime or skype. Call or email us today.

TRUST | COMMITMENT | RESULTS

JACQUELINE A. SALCINES, ESQ.
706 S. DIXIE HIGHWAY 2ND FLOOR
CORAL GABLES, FL 33146
TEL 305.669.5280 EMAIL: J.SALCINES@SALCINESLAW.COM

FLORIDA REAL ESTATE ATTORNEY AND BUSINESS LAW ATTORNEYS

COVID-19 has caused many buyers to want to cancel contracts either dealing with real estate purchases, vessel purchases, materials or equipment. Many contracts in Florida contain a Force Majeure clause that permits closing dates to be extended, or even cancelled if there is an act of God, terrorism, hurricanes, accidents, storms or other events “beyond the Seller’s control” that do not permit the contract to go through or be completed.

Not all Force Majeure clauses are written the same. And not all Force Majeure clauses permit cancellation. Most allow for postponement or time periods to be extended, particularly closing dates, due to the inability to comply with the contract terms.

We are getting many calls daily to review contracts for buyers and sellers to interpret the Force Majeure clause in their particular contracts. If you need a contract reviewed, free of charge, the Law Offices of Jacqueline A. Salcines is here to help.

Call us, email us, Skype or Facetime. We are one phone call away and happy to help our community in this time of need.

TRUST | COMMITMENT | RESULTS

JACQUELINE A. SALCINES. ESQ.
305. 669. 5280
J.SALCINES@SALCINESLAW.COM

LAWYER ON CALL

In these unprecedented times we are facing, we understand getting around and going to a lawyer’s office may be risky. We are happy to offer and provide our clients and the public Facetime consultations, telephone consultations and will continue to serve the public via email and phone.

Call us day or night with your real estate, debt and business questions. Attorney Salcines is standing by to assist you.

Jacqueline Salcines, Esq.

Tel: 305 669 5280

EMail: J.Salcines@Salcineslaw.com

If you are buying, selling or refinancing real estate, the most important decision you can make is to hire the right Real Estate Lawyer to represent you. Hiring a real estate lawyer to oversee the transaction and make sure that the transaction goes smoothly is what we are here for.

At the Law Offices of Jacqueline A. Salcines, PA, our real estate lawyers in Miami have over 31 years experience in closing residential and commercial real estate transactions. As both an Accountant and a Real Estate lawyer, attorney Jacqueline A. Salcines has closed more than 5,000 transactions and has the knowledge and experience to represent you in your real estate closing.

Did you know that in Florida, neither the seller, nor the bank can force you to use their title company. This is called coercion and there are laws against it. However, in Florida, if you do not select a title company, the lender will select one for you. Or worse, your realtor will recommend one or the seller will choose, leaving you at the mercy of others. And unprotected!

At the Law Offices of Jacqueline A. Salcines, PA our real estate lawyers serve buyers and seller from all over the globe with their real estate closing transactions. Whether buying a home, an investment property, a duplex, an income producing property, or a commercial land or vacant land, we have the knowledge and experience to protect you as a purchaser of real estate.

We handle the following real estate transactions for our clients:

  • As Is Residential Transactions
  • Commercial Transactions
  • Escrow deposits
  • Title Review, Title Examination and Title Insurance
  • Lien Searches
  • Real Estate closings
  • Sale by Owner transactions
  • 1031-Exchanges
  • FIRPTA and 1040 NR filings
  • Landlord Tenant Matters
  • Commercial and Residential Leases
  • Landlord Tenant evictions
  • Real estate litigation

Buying, selling or refinancing real property is often the largest investment that a person does in their lifetime. Don’t go it alone. Hire the services of an experienced real estate lawyer.

TRUST | COMMITMENT | RESULTS

Jacqueline A. Salcines, Esq.
706 S. Dixie Highway
Second Floor
Coral Gables, FL 33146
Tel: 305 | 669 | 5280

REAL ESTATE AND MORTGAGE LAWYER

With interest rates at an all time low, there has never been a better time to refinance your home loan. If you already own the home and the property has equity, you can tap into some of that equity and take cash out to pay off debt or for school. If the property has a higher interest rate mortgage, you will benefit by having a reduced rate and monthly payment.

The benefits of hiring a real estate lawyer who is also a title company for a refinance are many.

First of all, you are entitled in Florida to choose your own title company to handle the refinance. What you pay is nominal to get peace of mind. Often the fee is between $650 and $750 in attorney’s fees. Moreover, if you do not hire the title company and advise your lender you have selected one, the bank will hire one for you, and often charge twice as much. And, the worst part is, that even though you are paying the bill, the title company does not represent you. They represent the lender.

Additionally, by hiring a title company for a refinance, we can look for your prior owner title insurance policy and issue you a credit for your title insurance so you do not have to pay it again and will have significant savings at closing. Not all title companies issue the credit and borrowers end up paying unnecessary fees and costs.

Lastly, by hiring us, the closing is done at our offices. By the attorney.

Attorney Jacqueline A. Salcines will guide you every step of the way with all documents that need to be signed and explain what you are signing. The day of closing, the mortgage and note will be signed here so if you have any questions or doubts, the attorney will explain it.

Do not go it alone. A mortgage is often the highest debt consumers enter into and with all the legal terms and repercussions for default, it makes no sense to not hire a lawyer.

Attorney Jacqueline A Salcines, Esq., has been assisting borrowers with their real estate and mortgage needs for over 21 years. Consult with us today.

TRUST | COMMITMENT | RESULTS

Attorney Jacqueline A. Salcines, Esq.
706 S. Dixie Highway
Second Floor
Coral Gables, FL 33146
Tel: 305 | 669 | 5280
EMAIL: J.Salcines@salcineslaw.com

DEBT SETTLEMENT ATTORNEY

Credit Card companies, creditors, and anyone that has a judgment against a debtor can take legal action to garnish your wages or bank account.  In the case of a wage garnishment, Florida law permits the creditor to take up to 25% of the debtor’s paycheck, per pay period.  Florida law also permits bank accounts and even safe deposit boxes to be garnished and “frozen” to satisfy a money judgment.

Garnishment occurs when a creditor takes legal action to seize a portion of your wages, bank account, or other assets. In wage garnishment cases, the creditor will contact your employer and have your employer deduct a specified amount of money from your check each week to be forwarded to the creditor.  Credit Card companies, creditors, and anyone that has a judgment against a debtor can take legal action to garnish your wages or bank account.  In the case of a wage garnishment, Florida law permits the creditor to take up to 25% of the debtor’s paycheck, per pay period.  Florida law also permits bank accounts and even safe deposit boxes to be garnished and “frozen” to satisfy a money judgment.

Wage garnishments can impact families and severely affect the household finances.  Yet, there are many ways to stop them without having to file for bankruptcy. Wage garnishments can be particularly devastating to debtors (borrowers) because the writ of garnishment is continuing. Therefore, a single writ of garnishment can continue to garnish wages until the full amount of the debt is paid. Fortunately, debtors in Florida do have many legal options to prevent or stop a wage garnishment. If you are threatened with a wage garnishment or your wages are already being garnished, contact us.

At the Law Offices of Jacqueline A. Salcines, PA, attorney Salcines has been assisting clients whose wages or bank accounts are garnished by legally stopping such garnishments.

The First step in fighting a garnishment is assess whether you qualify for any of the 12 exemptions permitted in Florida. They are:

 1. Head of family wages.

 2. Social Security benefits.

3. Supplemental Security Income benefits.

4. Public assistance (welfare).

5. Workers’ Compensation.

6. Reemployment assistance or unemployment compensation.

7. Veterans’ benefits.

8. Retirement or profit-sharing benefits or pension money.

9. Life insurance benefits or cash surrender value of a life insurance policy or proceeds of annuity contract.

10. Disability income benefits.

11. Prepaid College Trust Fund or Medical Savings Account.

12. Other exemptions as provided by law.

Once the attorney is able to determine whether you qualify for an exemption, you must request a hearing.  At the hearing, we will prove to the Judge that you qualify for the exemption through evidence such as tax returns, bank statement, pay stubs, etc.

Wage garnishments and bank account garnishments impact lives.  We are here to help you.

We offer free phone consultations, and a no cost review of your case. Call us today. Tel. 305.669.5280 and see how we can help you.

About the Author: Jacqueline A. Salcines, Esq is the Owner and Managing Partner of the Law Offices of Jacqueline A. Salcines, P.A. Real Estate and Business Law Group. With over 20 years experience including holding a dual degree in Accounting, her broad knowledge of DEBT SETTLEMENT and GARNISHMENT LAW serves to aggressively protect and defend our firm’s clients, foreign investors, real estate buyers and sellers. Call us today to set up a free consultation to discuss your specific needs.

We are here for you! Main office 305 | 669 | 5280.

Or email the attorney directly: J.Salcines@Salcineslaw.com

TRUST | COMMITMENT | RESULTS

JACQUELINE A. SALCINES, ESQ.

706 S. DIXIE HIGHWAY SECOND FLOOR CORAL GABLES, FL 33146

TEL. 305 669 5280 Email: J.Salcines@Salcineslaw.com

SOUTH FLORIDA REAL ESTATE AND CONDOMINIUM LAWYER

HOMEOWNER ASSOCIATIONS AND CONDOMINIUM ASSOCIATIONS ARE GOVERNED BY FLORIDA STATUTES THAT ALLOW IT TO PLACE A LIEN ON YOUR PROPERTY AND INITIATE A FORECLOSURE.

YET MANY CONDOMINIUM AND HOMEOWNER ASSOCIATIONS CHARGE ILLEGAL AMOUNTS THAT ARE NOT PERMITTED, AS WELL AS ATTORNEYS FEES AND COSTS THAT COULD BE UNLAWFUL.

NEGOTIATING THE SUMS DOWN AND VERIFYING THE CHARGES ARE CRUCIAL.  THAT IS WHERE WE COME IN.

AT THE LAW OFFICES OF JACQUELINE SALCINES, PA WE BRING 20 YEARS EXPERIENCE TO OUR CLIENTS.  BOTH NEGOTIATING DOWN LIENS AS WELL AS INVESTIGATING THE VALIDITY OF THE CHARGES, WE ARE HERE TO HELP.

CONSULT TODAY.

JACQUELINE A. SALCINES, ESQ.
706 S. DIXIE HIGHWAY SECOND FLOOR
CORAL GABLES, FL 33146
(305) 669-5280  J.SALCINES@SALCINESLAW.COM

SOUTH FLORIDA REAL ESTATE LAWYER

FLORIDA “AS IS ” REAL ESTATE CONTRACTS HAVE MANY TERMS AND DATES THAT IF THE BUYER IS NOT CAREFUL, AND NOT REPRESENTED BY A REAL ESTATE LAWYER THAT IS MONITORING THE DEADLINES, YOUR ESCROW DEPOSIT COULD BE PLACED AT RISK.

THE ESCROW DEPOSIT IS THE EARNEST DEPOSIT OR MONEY PUT DOWN ON A CONTRACT TO SECURE THE PROPERTY.  IT IS USED ON ALL REAL ESTATE CONTRACTS AND PLACED IN AN ATTORNEY TRUST ACCOUNT OR REALTOR BROKER ESCROW ACCOUNT AND HELD UNTIL THE END OF THE TRANSACTION.

IF AN AS IS CONTRACT REQUIRES FINANCING, THE FINANCING CLAUSES OF THE REAL ESTATE CONTRACT WILL HAVE SPECIFIC DATES TO APPLY FOR THE LOAN AND TO OBTAIN A CREDIT OR LOAN APPROVAL. IF THE BUYER IS NOT CAREFUL OR IS NOT ADEQUATELY REPRESENTED, MISSING THOSE DATES COULD HAVE SERIOUS CONSEQUENCES INCLUDING THE FORFEITING OF YOUR ESCROW DEPOSIT TO THE SELLER.

A REAL ESTATE LAWYER WHO IS EXPERIENCED IN REAL ESTATE LAW NOT ONLY GUIDES YOU THROUGH THE CONTRACT MAZE BUT PROTECTS YOU AT EVERY CORNER.

IF THE SELLER IS WANTING TO KEEP THE DEPOSIT, THEN THERE ARE MANY WAYS TO MAKE SURE THAT DOES NOT HAPPEN.  WHETHER DENIAL LETTERS ARE TIMELY PROVIDED, OR INSPECTION PERIODS NEED TO BE EXTENDED, HAVING THE RIGHT ATTORNEY IN YOUR CORNER MAKES ALL THE DIFFERENCE.

WHETHER YOUR DEPOSIT IS IN JEOPARDY OR WHETHER YOU ARE JUST ENTERING INTO A REAL ESTATE CONTRACT, CALL US TODAY SO WE CAN HELP YOU NAVIGATE THE REAL ESTATE HOMEBUYING MAZE.

WITH OVER 20 PLUS YEARS EXPERIENCE IN THE REAL ESTATE LEGAL FIELD, ATTORNEY JACQUELINE SALCINES AND HER KNOWLEDGE CAN MAKE THE DIFFERENCE BETWEEN KEEPING A DEPOSIT OR FORFEITING IT.  LET OUR EXPERIENCE GO TO WORK FOR YOU. CONSULT TODAY.

TRUST   |   COMMITTMENT  |  RESULTS

JACQUELINE A. SALCINES, ESQ.
OWNER/FOUNDER
706 S. DIXIE HIGHWAY  2ND FLOOR
CORAL GABLES, FL 33146 
(305) 669-5280   J.SALCINES@SALCINESLAW.COM

BUSINESS LAW – SOUTH FLORIDA ATTORNEYS

Often partners, and former partners call me to represent them when they have parted ways, and are in the middle of a dispute, without a clear guideline or written instructions as to how the dispute should be resolved.  Whether partners have had a falling out because of unmet expectations regarding their capital contribution and returns of such capital, or the role they play within a company, the Operating Agreement is crucial to any business. 

If you are just starting a new company, limited liability company, or other type of business structure, it is crucial to set forth the terms of your agreement and understanding between all partners, so there is no dispute in the long run.  An Operating Agreement protects the business in the long run by defining each partner’s responsibilities, how the business will be managed and how conflicts and disputes will be resolved.

When friends and family start businesses together, they are on good terms and don’t ever imagine a falling out or parting of the ways can occur. Agreements are made verbally and often not put down in writing.  It is not uncommon to have nothing formalized and then, when a dispute arises, there is a clear misunderstanding as to each parties role and responsibilities.

By hiring a lawyer to create an Operating Agreement at the time the parties form the LLC, essential terms of the arrangement and expectation of each party can be set in writing.  The Operating Agreement serves to define each parties role, capital, return on capital, and expectations.  The Operating Agreement can be changed from time to time as required and will serve as the guideline to determine what needs to be done or how a dispute is handled.

At the Law Offices of Jacqueline A. Salcines, PA, as both an accountant and business lawyer, Jacqueline Salcines has been assisting her clients for over 20 years.  We can incorporate your business, listen to your needs and draft the Operating Agreement to address all the parties needs and concerns.

With Offices in Coral Gables, we are a phone call away. Consult today. 

JACQUELINE A. SALCINES. ESQ
706 S. DIXIE HIGWAY  SECOND FLOOR
CORAL GABLES, FL 33146
(305) 669 – 5280   EMAIL: J.SALCINES@SALCINESLAW.COM

Why hire the Law Offices of Jacqueline A. Salcines, P.A.?

With over 20 years of experience assisting clients with their Real Estate, litigation and transaction service needs,  we assist both large and small corporations as well as individuals facing legal challenges.  Many issues companies and individuals face every day, can quickly escalate into litigation.  However, with a knowledgeable and experienced attorney at your side, with a proven track record of handling such disputes before they escalate, that can make all the difference.

Often times individuals are quick to want to file a lawsuit or defend their rights, but litigation can be time consuming.  With the right tools to review your evidence and evaluate your strengths and weaknesses, we can assist in narrowing down issues between parties, and often settling cases and disputes before they go to court.

At the Law Offices of Jacqueline A. Salcines, PA, our attorney, Jacqueline Salcines brings to her clients 20 plus years of litigation, transaction and dispute resolution experience that has benefited our clients for decades.  Whether your dispute involves  a contract, or employment, or perhaps even an interfamily issue regarding inherited property after the loss of a loved one, we are here to help.

Contact us today and let our experience go to work for you.

TRUST   |   COMMITMENT  |   RESULTS

JACQUELINE A. SALCINES, ESQ.
706 S. DIXIE HIGHWAY
SECOND FLOOR
CORAL GABLES, FL 33146 
(305) 669 5280    EMAIL:  J.SALCINES@SALCINESLAW.COM