Forced closures, quarantined customers and an unknown future can make this feel like a dystopian future no one could imagine just a few days ago. Unless you are in the toilet paper or ammo business, this may feel like the worst week of your business’s life. However, just like Dorothy’s ruby slippers in the Wizard of Oz, you may have some tools to save your business from the Corona Crash of 2020. Below are three things you may have overlooked that could save you a ton of money and perhaps your business.
FORCE MAJEURE
A force majeure (“superior force”) clause in your lease or other important contracts is often overlooked as “boilerplate” or missed altogether. However, these clauses may be critical to keeping your business afloat during an unexpected crisis like we are seeing today.
These clauses basically say that if something awful and beyond a party’s control happens, they are excused in some way from performing some obligations (like making payments). For example, a force majeure clause might say you don’t have to pay rent, which would be pretty handy if the Governor just ordered your business closed. People often (mistakenly and frustratingly) refer to these types of clauses as “boilerplate” because they do not deal with the economics of the agreement and often are in the “Miscellaneous” section at the end of the document along with other yawners like “Choice of Law” and “Dispute Resolution.” That stuff is boring if you never have to consider it but a) many but not all leases have it, and b) they do not all say the same thing. If you have one or more leases for a brewery, restaurant or just about any hospitality venue, you should go read your lease and see if you have this clause (sometimes called “Acts of God”). Furthermore, they do not all say the same thing. Each clause may define what qualifies as a “Force Majeure.”
