Optimizing Legal Strategies Amidst COVID-19 Disruptions: A Guide For Businesses.pdf

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SHARPENING THE AXE: FORGING THE TOOLS NEEDED TO OPTIMIZE YOUR RESPONSE TO THE COVID-19 DISRUPTIONS

April 14, 2020

The document discusses strategies for addressing legal and business challenges posed by the COVID-19 pandemic. It includes an agenda covering disputes likely to arise from the disruption, theories on excusing non-performance due to COVID-19, insurance considerations, critical issues in evaluating excuses, and action steps for renegotiation or litigation.

Scenarios:

1. Bricks & Mortar: Cogs Unlimited (CU) faces cancellations of orders and supply chain disruptions affecting its manufacturing operations. Despite efforts to find replacements, CU struggles with reduced profitability and unyielding landlords on rent adjustments.

2. Service Industry: Dodson & Fogg (D&F), a law firm in East Virginia, encounters trial postponements and acquisition delays due to stay-home orders. The firm had expanded office space anticipating growth but now faces operational challenges.

3. Mixed Purpose Retail: Springfield County's COVID-19 order mandates the closure of non-essential businesses. Buzz Bait, a retail store selling various goods including guns and ammunition, is partially allowed to operate for essential sales, while Super Store remains fully open.

COVID-19 Disruptions:

The pandemic affects purchase agreements, supply chains, leases, construction projects, financing, service contracts, and bankruptcy proceedings.

System for Analysis:

1. Source of Obligation: Contracts, statutes, and common law create enforceable promises.
2. Enforcement: The judiciary upholds these rights, with the burden of proof on entities seeking to avoid performance.

Excuses to Performance:

The document outlines potential excuses for non-performance due to COVID-19:
- (a) Contractual obligations being unmet,
- (b) Impossibility or impracticality of performance,
- (c) Frustration of the purpose of performing.