A Force Majeure to be Reckoned With

Blog
A Force Majeure to be Reckoned With
Adam Slagowski Covid-19 Blog Post

Share this article:

Article tags:

Commercial & Non-Profit
Federal Government
Commercial
Federal Government
Mar 08, 2021

No-one expected the novel coronavirus (“COVID-19”) outbreak which reached our shores earlier last year. Lest of all, the impact it has had on businesses despite robust mitigation and containment measures taken by countries the world over. These far-reaching consequences have played havoc on the financial, legal, and contractual operations of most companies, including those supporting Government or Commercial entities. Fortunately, the US Government moved quickly to introduce mitigating measures such as new legislation and programs, and a dramatic expansion of existing support programs to help businesses – especially small businesses – survive the effects of the contagion. In addition, numerous programs were put in place to support employees and those who lost their jobs during this time. 

While largely unprecedented, the pandemic occurred at a time when the overall business climate was favorable, and the financial markets riding high. This demonstrates just how quickly the tides can turn, and what can happen when a company finds itself unprepared to effectively adapt to the changing landscape. Truth is, most companies are taught to prepare for the unexpected, but the almost-overnight change in the business climate caused by the pandemic has been a lesson for us all. 

Weathering the Storm

So, what should companies do? There are some basic legal and financial measures small businesses can take from the outset to ensure they successfully weather the unexpected challenges to their business environment. From a legal perspective, companies should carefully – and immediately – review the exact language of the force majeure clause. Not all force majeure clauses are created equal, not in the commercial market, nor as a Government contractor or subcontractor. It is vitally important to review and understand the notification and termination provisions found in your contracts and subcontracts. For example, a business that fails to provide timely notice will be at risk in the event of a dispute regarding the situation at hand. Additionally, should a force majeure event occur, there might be specific processes required regarding the termination or suspension of work. Companies with subcontractors will want to ensure that the provisions from the prime contract flow down to each subcontract. 

The Power of Numbers

On the financial front, the Government has provided a wide variety of programs to support employers and employees. These range from SBA loan payments for small business to the Paycheck Protection Program (PPP), established through the CARES act. These programs demonstrate that in trying times, established programs will help small businesses survive. But what is key is that companies are well-versed in all of the programs that are available and have proactive partners (banks, lenders, accountants, etc.) on stand-by to assist in obtaining support in a timely manner. Case in point, during the PPP program, those who delayed applying for assistance either did not receive it at all or received it far later than those who were ready and had applications in as soon as they would be accepted. In addition, owing to the basic nature of programs such as these, many points are undefined and will go through constant changes. Therefore, this same support team needs to be constantly monitoring both the situation and the markets. This applies to federal, state, local and even specialized programs offered by vendors. We need to make sure we can fully take advantage of all support available, no matter what the circumstances. 

Being Prepared is Half the Victory

While one hopes never to see anything again that impacts business the way COVID-19 did, there will always be the potential for industry-wide challenges and upheaval. The ability to leverage the contractual and financial aspects of both agreements and one’s support network is key to surviving and coming out stronger. 

***

Tactis is a full lifecycle customer experience agency working for organizations across all points of communication, combining human touch with digital expertise to create outcomes that matter. Adam Slagowski serves as President and CEO. 

Contact Us

One file only - 10 MB limit.
Types: pdf, doc, docx, ppt, txt, rtf.