Can You Cancel A Contract Due To COVID-19

COVID-19 vaccinations have begun, but the disease is still a serious concern. Many businesses are still suffering from mandatory closures, delayed openings, restricted hours, and other such restrictions.

So you may be wondering if, as a business owner, it’s possible to cancel a contract due to COVID-19. Can you back out of a contract due to the coronavirus? In this blog, we’ll discuss what you need to know. ‍

COVID-19 Does Not Grant Any Automatic Right To Cancel A Contract

Unfortunately, there is no legal precedent or law that allows a business owner or any person to cancel a contract completely simply due to the effects of COVID-19. If you wish to cancel or back out of a contract, you still must do so according to the terms of the contract, and pay penalties or other costs related to canceling the contract.

If you attempt to cancel the contract without following the provisions contained within it, you will be in “breach of contract.” It’s entirely possible for the other party to sue you for damages in civil court. 

However, this does not mean there are no ways to back out of a contract or alter its terms. It all depends on the specific provisions and clauses contained in the contract. Let’s discuss a few options now.

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Force Majeure ‍

“Force majeure” clauses are present in some contracts and relieve one or both parties of their contractual responsibilities when an event happens that’s out of their control. This is sometimes known as “Acts of God,” which could include a natural disaster. 

This might also include COVID-19, and you may be able to rely on this clause to cancel a contract. This depends on the specific terms of the clause, though, so you should consult with an Ellis County contracts attorney before taking any further action. 
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‍Impossibility or Impracticability‍

Even if there is no force majeure clause, you may be able to cancel a contract if you can argue impossibility or impracticability. In other words, if your ability to operate your business is impossible by circumstances outside your control, you may be able to cancel the contract.

For example, if you rented a space to open a concert venue in March 2020 and then were unable to hold any events due to COVID-19 restriction that made it impossible to book bands, it could be argued that you should be able to cancel the lease contract, since circumstances outside of your control made it impossible to operate your business.

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Termination

‍Many contracts have a termination clause, outlining steps that can be taken to cancel the contract without breaching it. This often means paying hefty penalties and fees, but you can still legally cancel and terminate a contract as long as you abide by these clauses and take the steps outlined within your contract.‍

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Explore Your Options With An Ellis County Contracts Attorney ‍

We understand that COVID-19 has been tough on business owners and entrepreneurs. If you need help exploring how you may be able to cancel a contract or defend yourself from breach of contract claims, Foster Massengill, PLLC is here to help. Contact us online or call today at (972) 878-9105 to schedule an appointment in Ellis County.