By Cora Whitney
Recently, I had a small business client in Boise approach me about COVID-19-proofing contracts. If the pandemic has taught us anything, it’s that we are all living with unprecedented uncertainty, which makes our jobs as attorneys really fun, but also challenging. While no contract is going to be perfect, there are small changes businesses can make to better protect themselves from what is called in legalese “force majeure events”. A force majeure event refers to the occurrence of unforeseeable circumstances beyond anyone’s control, where no party was negligent or intentionally engaging in misconduct. It includes, but is not limited to, epidemic, pandemic, quarantine, act of war, natural disaster, shortage, strike, lockout, labor dispute, civil commotion, act of God, any act by any governmental authority, or any other act or event beyond either party’s reasonable control.
My particular client is a business that offers professional services and mostly operates remotely regardless of COVID-19, and has done so since prior to the pandemic. My client’s employees are all vaccinated, which allows for travel for in-person meetings with their customers. However, this in-person travel understandably requires a larger fee than work completed remotely, and only occurs when my client’s customers request in-person work. To ensure their bases were covered and they had a strong process to recoup fees due to unforeseen circumstances, I suggested several changes to their contracts, including:
- Protecting against changes to the Statement of Work. In the event of an act of God or force majeure event, both parties must sign an updated Statement of Work that guides how the change of work will be addressed, including if an in-person session needs to move back to a remote setting.
- Ability to recoup in-person costs. Be sure that your contract acknowledges that changes to any Statement of Work may result in additional fees, and that you don’t reduce your price just because the client cancels the in-person aspect of your work.
- Add deadlines to mitigate the impact of changes. It’s reasonable to offer your virtual training rate, for example, if you are given adequate notice. However, planning for an in-person session takes time, and in the case of my client, it was important to ensure this extra time would be compensated when schedule changes due to COVID-19 are made late in the process.
- Consider charging late fees. It’s always a good idea for businesses to have a clear process of invoicing and receiving payment so that there are no surprises. Particularly when in-person travel is required, you’ll want to be sure that you’ve received fees up front as much as possible and have a clear way to track your reimbursable expenses.
- Spell out what cooperation is expected in the case of a force majeure event. In my client’s contract, I suggested language stating that the party claiming a force majeure event must use diligent and reasonable efforts to mitigate the effect of the unforeseen circumstance and cooperate to implement a plan of remedial and reasonable alternative ways to fulfill the contract.
It’s important to talk with an attorney about your individual business needs when it comes to unforeseen circumstances outside of anyone’s control. This list is by no means exhaustive and is meant to get you thinking about changes that might be appropriate for you. If you’d like to make sure your contracts are COVID-19-proof, or if they could use an update, email me at email@example.com.