Matthew Kenney

Small Business | Workplace Law

Coronavirus and Contracts: Must You Perform?

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The COVID-19 pandemic has negatively affected the global supply chain. Orders are going unfilled, which means contracts terms are not being met. Does it constitute a breach-of-contract when a supplier cannot fulfill its obligations?

The answer is: It depends.

Having a signed contract is one thing. Enforcing it is another. Under Florida law, there are instances where courts will excuse a party from contract performance. Two such instances: Where it is impossible to perform; and when it is impractical to perform.

However, courts will generally not excuse a party from performing when a disruptive event is anticipated at the time of contract formation. Stated differently, a court might require a party to perform if a risk — including a pandemic and resulting national emergency — was anticipated by the parties when they entered the contract.

The question before many business owners and their legal counsel: Is COVID-19 a risk that was reasonably anticipated by the parties?

Many written contracts will have a Force Majeure (meaning “Superior Force” ) clause, which excuses a party from performance if there is an unforeseen and uncontrollable event the parties could not have contemplated during the formation of their contract. There is no doubt COVID-19’s impact on one’s business is uncontrollable. The question in a breach-of-contract lawsuit, however, might be: Was it unforeseeable?

The phrase Force Majeure is generally used in contracts as synonymous with an “Act of God”. Contract performance prevented by hurricanes, floods and tornadoes would fall easily into this category. But what of COVID-19? Was this terrible event really unforeseeable?

Although COVID-19 feels like a sucker punch to our economy, futurists have warned of the risks of potential epidemics and pandemics (just like COVID-19) for years. Bill Gates gave a TED Talk on the subject in 2015, for example. Since 2000, the world has seen outbreaks of SARS, Swine Flu, Avian Flu, MERS etc. A reasonable person could argue parties should have addressed future epidemics and pandemics in their contract terms, given the notice we’ve been given by experts about our susceptibility to such events.

The point: Do not assume the effects of COVID-19 will absolve your company from contractual liability, even if performance is impossible or impracticable. A judge might ask: “If other companies and entrepreneurs specifically addressed the issues of national emergency, epidemic, or pandemic in their contracts….why didn’t you?”

Florida courts will likely evaluate your Force Majeure clause based on its clear, unambiguous language. It’s possible Florida courts will view non-performance related to COVID-19 as unforeseeable and uncontrollable events, freeing a party from performance. It is equally possible they will not. Therefore, the best approach going forward is to ensure your contract languages addresses epidemics and pandemics in clear, unambiguous terms.

Employees, Texting & Driving: What’s Your Policy?

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Department of Transportation statistics suggest we spend about an hour daily driving our vehicles. Of course, much of this time is spent commuting to/from work. We also know that text messaging within companies has become ubiquitous. So, this begs the question: Might employees and employers be texting each other while driving?

If the answer to the answer is “Yes”, the next question managers should ask is “Does our company have a texting while driving policy?”

If your company does not have such a policy, it should. Texting while driving is illegal in Florida. On January 1st, 2020 a tougher law goes into effect making texting-while-driving a primary offense. Essentially, this means police officers may pull-over drivers expressly for texting.

If your employees are texting each other, while at least one is driving, your company is assuming significant risk. We know this because texting while driving is extremely dangerous. In 2018 alone, nearly 5,000 deaths; more than 1,000,000 accidents; and nearly 400,000 injuries were related to cell phone related distracted driving.

If an employee is driving and texting, and the text is related to his/job, then any accident flowing from the employee’s distracted driving would, likely, be viewed as within the scope of employment. Thus, the employer would be responsible. It’s simple negligence, really. Drivers have a duty to protect others. Texting while driving breaches that duty. If injury is caused due to this breach; and the damages are those anticipated from such a breach (e.g. personal injury, property damage etc.)…your company is negligent.

Therefore, every company should have an anti-texting while driving policy that educates employees to the risks of texting while driving; prohibits the conduct;, and reinforces the illegality of the practice. Such a policy could establish best practices for how and when co-workers should communicate. At the very least, it could encourage employees to use smartphone features that block incoming messages while driving.

Rest assured, if an employee is involved in a texting while driving accident the plaintiff’s attorney will ask about your policy and training. Protect your company. Protect your employees. Protect innocent drivers, passengers and pedestrians. Make sure your company has an anti-texting policy…and enforce it. I’d be happy to draft such a policy for you. It’s not the most challenging legal exercise, but it’s among the most important. If your HR manager chooses to draft the policy, just be sure to have your lawyer inspect it to ensure it’s aligned with Florida law.

Is an English-Speaking Only Workplace Legal?

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My Business Law students are often surprised to learn that the State of Florida, unlike the United States of America, has an official language: English. See Article II, Section 9 of the Florida Constitution. So, does that mean employers can require employees to only speak English at work? Generally speaking, the answer is “no”.

Florida employers who attempt to unreasonably require an English language-only workplace may experience a similar fate to the Texas resort, which recently paid more than $2.6 Million in damages for requiring 25 Hispanic employees to speak English only.

Students often ask: If English is the official language in Florida, why is requiring an English speaking workplace illegal? The reason: Such a policy violates the Federal Civil Rights Act of 1964 (and the Florida Civil Rights Act of 1992). Preventing employees from speaking their primary language is considered National Origin discrimination because language is a manifestation of one’s birthplace.

Stated differently, racist managers might try to circumvent laws against racial discrimination by prohibiting employment based on language instead. However, government agencies and plaintiff lawyers are wise to this trick. Prohibiting certain languages in the workplace is tantamount to prohibiting certain types of people, and smart people know it.

Employees should know, however, that Federal and Florida anti-discrimination laws generally apply to workplaces with 15 or more employees. Some county ordinances (e.g. Osceola and Orange) reduce the threshold number of employees to as little as 5 or 6. However, it’s still technically legal for very small businesses to require an English speaking workplace. Immoral, perhaps…but not illegal.

This is another reason why employees should consider the size of an employer (based on the number of employees) before seeking employment. Some laws apply to employers of all sizes, while other laws apply only to some employers. Likewise, employers should know what laws will apply as their businesses grow. Again, employment law is often dependent on the size of a company based on the number of workers employed, not the amount of revenue generated.

(c) Copyright 2019. All Rights Reserved.

Beware of Legal Forms

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Parties signing contract
Contract Formation

A key to business success is the ability to distinguish a cost from an investment. In business, we’re correctly taught to reduce costs. But how do you define costs? If you look at legal fees as a cost, you’ll seek to avoid them. One seemingly smart way of reducing legal fees is using legal forms found online. However, is this a smart idea?

Words and punctuation mean things under the law. A well-drafted business contract, therefore, is tailored to your unique situation and jurisdiction. For example, it likely has parol evidence, severability, and forum clauses inserted to protect you. Just wondering: Do you even know what parol evidence is? If not, then how will you know if a parol evidence clause is missing?

I chose three random contract concepts, but could easily rattle-off a dozen more. Any transacational lawyer could. We distinguish between applying the Uniform Commercial Code versus the Common Law; know why a contract should use Oxford commas; and explain the Latin maxim Contra Proferentem to clients on a daily basis. It’s our business. We’re experts at contract review and drafting, just like you’re likely an expert in your occupation.

Drafting and interpreting contracts is a skill developed over thousands of hours of study and practice. If you hire a transacational lawyer to review a downloaded form, we will invariably find a lot of problems with that form. Some of the boilerplate language may suffice, but we’ll find problems a non-lawyer won’t recognize. Those problems can be very costly if the form is signed and becomes a binding contract.

Whoever wrote a legal form found online — if it was even written by a licensed attorney — is not protecting you, or your business. And, you’re not protecting yourself if you incorrectly view contract drafting as a cost, rather than an investment.

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