As everyone is aware, the World Health Organization declared the outbreak of COVID-19 as a pandemic on March 11, 2020. This virus is continuously having an impact on various aspects of peoples lives, as well as on businesses and their Contractual Obligations.
As a result of the pandemic, many businesses had to shut down and/or alter the services they render. This can result in a breach of a contractual obligation that one party was obligated to fulfill. In such circumstance, the party may want to rely on the Force Majeure small claims clause in order to release themselves from the contract.
FORCE MAJEURE CLAUSE
A Force Majeure clause is used to relieve a party from a contract when an event that is out of the control of either party to the contract occurs, and makes the performance of the contractual obligation impossible.
Under Common Law, the Force Majeure clause must be included in the contract in order for it to be relied upon. The Courts have determined a few conditions must be demonstrated by the party relying upon a Force Majeure clause:
- The event that transpired, leading the party to rely upon the Force Majeure clause had to have been unusual and beyond both parties prediction and/or control. The event had to have rendered the performance of the contractual obligation impossible. It is important to note the contractual obligation needs to be impossible, not difficult. For example, an economic hardship may not be enough to release a party from the contract.
- The event was not caused by the parties’ “negligence or omission”
In order to rely upon a Force Majeure clause triggered by the COVID-19 outbreak, there are factors that must be determined.
For example: mitigation, direct link between the contractual obligation and COVID-19, level of impact to name a few.
Business and individuals should review clauses in their contracts and ensure their obligations are being met. It is also advisable to contact a legal representative to receive appropriate legal advice regarding your rights and responsibilities.
We believe affordable justice matters and should be accessible to everyone. Trust the professional advice of Balatidis Legal Services; a small claims court paralegal servicing Mississauga, Brampton, Toronto, Oakville, Burlington and Hamilton.