What The Zika Virus Scare Can Teach You About Business Contracts
There are lessons in business and commercial law everywhere you look, even in places that seem the least obvious. You may think that the recent Zika virus scare in Miami has nothing to do with the law, or with your business. But in fact, hidden behind the scenes of the Zika virus scare are numerous hypotheticals that remind us of the importance of the language that we use in our business agreements.
CDC Issues Warning
As many know, the CDC has warned people who are planning to get pregnant not to travel to the Wynwood district of Miami for fear of contracting of the Zika virus. Wynwood is a small but bustling art district, which attracts tourists, artists, barhoppers, and restaurateurs.
It goes without saying that the warning will decrease foot traffic to the area. Restaurants that depend on customers will see revenue drop. Art festivals that may be scheduled may have to be rescheduled. Practically any business, venue, or event that depends on foot traffic will be impacted.
So what if you are holding an event in Wynwood, and you have contracts with vendors in anticipation of the public coming to your event, and now, because of the scare, it looks like holding your event won’t be possible? What if you are a restaurant and you can’t pay your rent to the landlord for the months that the CDC warning is in effect?
In these situations, there is a chance that you would be protected (that is, excused from payment, or able to back out of agreements) if you had what is known as a force majeure clause in your contracts. A force majeure clause excuses performance under an agreement for events that may occur outside of a party’s control. Often, the events are those that are unanticipated and which cannot be predicted. They are often colloquially called “acts of God” clauses.
These are clauses that say that in the event of things like catastrophic weather events, terrorism, death, civil unrest, or any litany of other events, performance under an agreement is either temporarily suspended, or that the agreement itself is completely waived. The events often must be unpredictable. So for example, a thunderstorm wouldn’t be covered, but a hurricane would.
We don’t think much of these clauses, because the circumstances when we need to rely on them are rare. But there is an argument that the unexpected emergence of a serious virus that causes the CDC to issue a warning to citizens could fall under force majeure.
It may not be reported in the news, but as businesses start to suffer economic consequences as a result of reduced tourism, don’t be surprised if legal battles ensue over business contracts that rely upon tourist and visitor revenue. And for your business, it’s a lesson in why it’s important to make sure that you cover every possible contingency in your agreements.
Make sure your business is protected and that you have covered every possible risk for your business. Contact Tampa business attorney David Toback to discuss your business agreements and business planning.