It is said the devil is in the details, and often, what appear to be “boilerplate” contract terms can be devilish indeed. Virtually every contract contains a notice provision that seldom is cause for concern. However, with millions of Americans working from home, thousands of workplaces are left unattended, and those currently vacant office addresses are usually the addresses listed in a contract’s noticing provision.
The current COVID-19 pandemic created a wide national patchwork of various local and state regulations controlling business closures, re-openings, and in some instances, closures yet again. In response to these varying and disjointed cautionary measures, many businesses have transitioned to working remotely, have temporarily or permanently shut down their physical locations, or have moved to smaller, more cost-efficient locations.
Widespread supply chain disruptions necessarily follow from idle offices, plants and factories. If my supplier cannot furnish the goods or services required under our contract, I will, likewise be unable to supply my customer as required by that contract. My failure to do so may, depending on the specifics of the contract, be a breach which I cannot cure. Further, I will likely be subject to damages for failing to either perform under the contract, or to notice my customer of my inability to do so based upon a force majeure clause, or as commonly referred to, an Act of God.
Whether the force majeure provision can be properly invoked is a matter that will be subject to mediation and, often, court proceedings. The legitimacy of force majeure notwithstanding, it is the requirement to communicate with your client that presents the first hurdle.
The notice clause of a contract outlines the formal communications which are required for force majeure. It states the form of the notice, to whom it must be sent, the manner in which it must be sent, and defines when the notice is considered received by the other party. Further, certain types of notices require a written response within a specified number of days. Often times, notice clauses do not include delivery by email and instead rely on outdated methods such as mail, fax, or overnight couriers.
If these clauses are not timely updated with alternate addresses, notices will be delivered to buildings and fax numbers that go unchecked because no one is physically there to receive or sign for them. Missing a properly delivered notice, or a timely response to one, could have severe consequences for your business. For example, if I miss notice by my supplier, I may be expecting contract performance and have no reason to notice my customer. In this case, my supplier will be absolved of breach of contract by having noticed me, however I will have breached the contract with my customer if I failed to notice them.
While one can hope businesses operate ethically and morally, there will be those who see this pandemic as an opportunity to take advantage of your business by sending technically correct and contractually compliant notices to offices they know are empty.
Luckily, almost all notice clauses allow parties to update their contact information, and the time to do so is now! A business can save itself a lot of needless trouble (and possibly money) by amending contracts to update where and how notice is to be delivered. To take it a step further, we suggest amending these clauses to require mandatory copies of all notices be sent via email in addition to whatever other method of delivery is specified. If not, your business could remain vulnerable to significant losses from a mere technicality.