The Legal Consequences of Canceling an Event Due to the Coronavirus

Web Admin - Monday, March 16, 2020

Schaumburg breach of contract lawyer coronavirusAs a result of the growing threat from the coronavirus, numerous events have been canceled, postponed, or modified out of fear that this virus might continue to spread and put attendees’ health in jeopardy. Some sporting events have been canceled or postponed, such as international rugby games, FIFA World Cup qualifiers, and the NCAA March Madness tournament. In addition, many sporting activities have adapted with the times: some events will not allow crowds, and most professional leagues in the U.S. have restricted locker-room access.

In terms of cultural events, the South by Southwest festival has been canceled. Annual St. Patrick’s Day parades in both Ireland and Boston have been canceled. In addition, many conferences and other educational opportunities have been canceled. With so many events being canceled due to the coronavirus, understanding how you can legally safeguard your company against such cancelations and postponements is critically important, especially when it comes to corporate law.

Breach of Contract and Force Majeure Provisions

The easiest way to make sure you are covered in case the coronavirus causes the cancellation or postponement of your event is to review your contract and see if it contains any force majeure provisions. A force majeure clause in a contract enables both parties to legally breach the contract. However, for something to be considered “force majeure,” it must meet the following requirements:
  • - The events must be unavoidable and unforeseeable.
  • - The events must not be a consequence of either party’s actions.

Most force majeure arguments imply there was an “Act of God” involved. Some examples of force majeure include:

  • - Unpredicted natural disasters like earthquakes and tornadoes
  • - A war or other type of massive violent activity like riots
  • - Government laws taking effect that prevent the event from taking place

What to Do if You Have to Cancel an Event Due to the Coronavirus

If your contract has a force majeure clause, you should check to see if it explicitly enumerates epidemics like the coronavirus as a possible reason for not being able to complete what is expected from the contract. In those cases, any breach of contract charge brought against you will probably be dismissed.

If, however, you do not have epidemics specifically spelled out in the force majeure clause, then you may need to defend against a breach of contract claim. If your contract has no force majeure clause at all, the case would revert to the common law doctrine of “impossibility of performance,” which states that an unforeseen circumstance has rendered your execution of the contract objectively impossible. When addressing these issues, you should work with an attorney to determine the best strategy for demonstrating that you should not be held liable for a breach of contract.

Upon reviewing your contract, if you find that there is no force majeure clause, or if the clause contained therein does not address epidemics, you may want to add that to a newer draft of that contract and all future drafts. If you enumerate epidemics in your contract, you will not be held in breach of contract. It is also a good idea to include contingency plans in case an epidemic like the coronavirus does cause you to cancel an event, such as plans for rescheduling.

Contact a Palatine Corporate Lawyer

The coronavirus is having a significant effect on the economy. This means that more events will be canceled, and more companies could be considered in breach of their contracts for not hosting a promised event as agreed to in the contract. If your business is faced with this predicament, contact an Inverness breach of contract attorney with the experience necessary to renegotiate your contract or prove that it is impossible for you to fulfill the obligations of your contract. Give Drost, Gilbert, Andrew & Apicella, LLC, at 847-934-6000 a call for a free consultation.

About the Author: Attorney Jay Andrew is a founding partner of Drost, Gilbert, Andrew & Apicella, LLC. He is a graduate of the University of Dayton School of Law and has been practicing in estate planning, probate, trust administration, real estate law, residential/ commercial leasing, contracts, and civil litigation. Since 2005, Jay has been a Chair of the Mock Trial Committee for the Annual Northwest Suburban Bar Association High School Mock Trial Invitation which serves over 240 local Illinois students each year.





New Changes in the Multi-Board Residential Real Estate Contract 7.0

Web Admin - Friday, March 29, 2019
Inverness real estate contract lawyerWhen Illinois residents buy and sell homes, their real estate agents and lawyers generally use a standard form for the sales agreement, the 13-page multi-board residential real estate contract. The latest version, 7.0, should be used for all transactions initiated after March 1, 2019. It contains several important changes that make the contract easier to use than the 6.1e version that has been in use since 2015. 

Significant Changes in Real Estate Contract 7.0 versus 6.1e

The changes to the contract are mainly intended to help reduce errors and misunderstandings amongst all parties involved in a real estate sale. The most important changes that buyers, sellers, and real estate agents should be aware of are:

- Inspection contingency: Subparagraph (a) of the inspection paragraph has been rewritten to prevent buyers from demanding minor repairs. It now specifically states that minor repairs “shall not be a basis for the buyer to cancel” the contract. In addition, the seller can now terminate the contract and return the buyer’s earnest money if the buyer asks for repairs or credits unrelated to the major components of the property. 

- Financing contingency: The old Mortgage Contingency paragraph has been replaced by a Financing paragraph with a choice of three options: mortgage contingency, cash transaction with no mortgage, or cash transaction with mortgage allowed. The deadline for the buyer to serve notice that they did not get the specified mortgage is now fixed at either 45 days after acceptance or five business days before closing, whichever is earlier.

- Property tax representations: Two new seller representations have been added to the contract to better inform buyers about a home’s future property taxes. First, sellers must indicate if there are any home improvements that have not yet been assessed for property tax purposes, such as an addition or a new garage. Second, sellers must indicate if there have been any property improvements eligible for a home improvement tax exemption. 

- Attorney review: The language of this paragraph has been clarified so that any proposed change to the sales contract that references subparagraph (d) will be deemed a “proposal;” any other change will be deemed a counteroffer. A buyer or seller can void the contract due to disagreement over a counteroffer but not over a proposal. 

- Seller credits at closing: The paragraph stating whether the seller will pay the buyer’s closing costs has been moved from page 10 to page 1, so it is located near the purchase price.

- Fixtures and personal property included: Four more items were added to the list: hardscape, wall-mounted brackets for TV/AV equipment, water softener, and wine/beverage refrigerator.

- Foreign seller disclosure: If the seller is a nonresident alien or foreign corporation, this fact must be disclosed for federal tax reasons. 

Consult a Palatine Real Estate Lawyer

To ensure that your home sale and/or purchase proceeds smoothly and that your legal and financial interests are protected throughout the process, contact an experienced Arlington Heights real estate attorney by calling 847-934-6000. The attorneys of Drost, Gilbert, Andrew & Apicella, LLC will represent your interests in any real estate transaction. 

About the Author: Attorney Jay Andrew is a founding partner of Drost, Gilbert, Andrew & Apicella, LLC. He is a graduate of the University of Dayton School of Law and has been practicing in estate planning, probate, trust administration, real estate law, residential/ commercial leasing, contracts, and civil litigation. Since 2005, Jay has been a Chair of the Mock Trial Committee for the Annual Northwest Suburban Bar Association High School Mock Trial Invitation which serves over 240 local Illinois students each year.


Why Construction Subcontractors Should Avoid “Pay When Paid” Contracts

Web Admin - Thursday, February 28, 2019
Rolling Meadows civil litigation attorney breach of contractAs a construction subcontractor, you need to be careful about how your contracts are written, or you could expose yourself to substantial risk of non-payment. One particular clause to watch out for when signing a subcontractor construction contract is the clause which specifies the circumstances of payment, also known as a payment contingency clause. This provision may take the form of either “pay when paid” or “pay if paid,” and there is a meaningful legal difference between the two.

What Is a “Pay When Paid” Clause in a Construction Contract?

It is a generally accepted practice in the construction industry that a subcontractor gets paid only after the general contractor gets paid by the property developer. If a project developer fails to pay the general contractor on time or at all, the subcontractor is also at risk of being paid late or not at all, depending on how their contract is written.

Most state courts, including Illinois, have ruled that a “pay when paid” clause does not excuse the general contractor from paying subs in the event that the property developer does not pay the general contractor. Rather, a “pay when paid” clause may be interpreted as merely specifying an approach for the timing of payments, i.e., the number of days between the time when the general contractor receives payment from the property developer and distributes payments to subcontractors.

In contrast, a “pay if paid” clause is interpreted by the courts as meaning that subcontractors will not be paid unless and until the general contractor is paid by the property developer. This shifts the risk of non-payment from the general contractor to the subcontractor. As long as the contract language is precisely written and makes it clear that the subcontractor accepts the risk that they will not be paid if the general contractor is not paid, the courts will enforce a “pay if paid” clause. If there is any ambiguity, the courts could order payment to a subcontractor even if the general contractor is not paid.

Why Should Construction Subcontractors Object to “Pay If Paid” and “Pay When Paid” Contracts?

Because the general contractor controls access to the work, they often have the leverage to demand that subcontractors accept contingent payment clauses in their contracts. However, if you are a subcontractor, it is not in your best interests to accept a “pay if paid” or “pay when paid” clause in your contracts. You are legally obligated to pay for all of your equipment and labor expenses, so you need to protect your right to be paid by the general contractor in a timely manner. 

Because they are in direct contact with the property developer, the general contractor has a greater ability than a subcontractor to assess the property developer’s finances and ability to pay. Therefore, it is only right that the general contractor should bear the risk of late payment or non-payment by the developer.

Contingent payment clauses can make it harder for you to obtain payment if the property developer breaches their contract with the general contractor. Because your contract is with the general contractor, you have no standing to sue the property developer for failure to pay. Your only recourse is typically to secure a mechanic’s lien against the property developer. The Illinois mechanic’s lien act, 770 ILCS 60/21(e), specifically protects your right as a subcontractor to file a lien even if your contract with the general contractor has a payment contingency clause. 

Consult a Palatine Construction Contracts Lawyer

It is far more cost-effective in the long run to have a lawyer review your contracts before you sign them rather than to sue someone for breach of contract after a deal goes bad or to go after money owed to you by obtaining a mechanic’s lien. Call an experienced Arlington Heights civil litigation attorney at 847-934-6000 for a free initial consultation about your current legal needs. At Drost, Gilbert, Andrew & Apicella, LLC, we have the experience in both contract law and real estate law to support a wide range of legal needs for real estate developers and construction companies. 

About the Author: Attorney Jay Andrew is a founding partner of Drost, Gilbert, Andrew & Apicella, LLC. He is a graduate of the University of Dayton School of Law and has been practicing in estate planning, probate, trust administration, real estate law, residential/ commercial leasing, contracts, and civil litigation. Since 2005, Jay has been a Chair of the Mock Trial Committee for the Annual Northwest Suburban Bar Association High School Mock Trial Invitation which serves over 240 local Illinois students each year.


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