A 20/20 Perspective On COVID-19's Impact On Contracts

Many legal uncertainties accompanied the pandemic's arrival in March 2020. As businesses closed and events were cancelled, the legal community wondered how contractual legal concepts such as force majeure, frustration, material adverse event and best efforts might apply in the context of COVID-19.

This blog will briefly explore how Courts have interpreted these contractual clauses against the background of the COVID-19 pandemic in 2020.

Key Takeaways

• The specific factual circumstances are crucial. The Courts have been unwilling to simply accept the mere presence of the COVID-19 pandemic as resulting in a presumed inability to carry out contractual obligations.
• The Courts have closely assessed the particular impact, if any, of the pandemic on the particular relationship. For example, when evaluating whether COVID-19 constitutes a material adverse effect, courts will consider whether the target business has been disproportionately affected by the pandemic.