Wanting to diversify his investments, Ernest “Big Daddy” Bux signed a franchise agreement with GA Fitness last year. Construction by Big Daddy’s contractor Bill Toosuit is scheduled to be completed for in time for an early May grand opening in the new strip center owned and managed by Mawl & Mawl. Last week, in response to the COVID-19 pandemic, the town’s mayor and the state governor prohibited any gathering of more than 10 people and directed that all bars, restaurants and gymnasiums close. Now that gymnasiums are prohibited from opening, Big Daddy’s business is almost certain to fail, and Mawl & Mawl loses a tenant. If Big Daddy stops construction and buys out his current lease obligation, Bill Toosuit loses his construction project and Mawl & Mawl loses a long-term tenant. Can Big Daddy get out of his lease obligations? And his construction contract? Are there other options to get to a win-win?
Continue Reading Can COVID-19 Trigger a Force Majeure Defense?
force majeure
Can COVID-19 Make a Contract Impossible to Perform?
Wanting to diversify his investments, Ernest “Big Daddy” Bux signed a franchise agreement with GA Fitness last year. Construction by Big Daddy’s contractor Bill Toosuit is scheduled to be completed for in time for an early May grand opening in the new strip center owned and managed by Mawl & Mawl. Last week, in response to the COVID-19 pandemic, the town’s mayor and the state governor prohibited any gathering of more than 10 people and directed that all bars, restaurants and gymnasiums close. Now that gymnasiums are prohibited from opening, Big Daddy’s business is almost certain to fail, and Mawl & Mawl loses a tenant. If Big Daddy stops construction and buys out his current lease obligation, Bill Toosuit loses his construction project and Mawl & Mawl loses a long-term tenant. Can Big Daddy get out of his lease obligations? And his construction contract? Are there other options to get to a win-win?
Continue Reading Can COVID-19 Make a Contract Impossible to Perform?
Commercial Leases Underwater from Harvey
Because of Hurricane Harvey, oil and gas production company Gonzales Energy and its owner Paunscho are treading water. Rising hurricane flood waters destroyed his files, water-logged his computers and ruined office equipment in their downtown leased offices preventing Gonzales Energy from servicing its wells, pipelines and royalty owners. As flood waters recede, Paunscho wants to know what rent relief he gets for premises so severely damaged he can’t use them. Landlord Lester “Les” Orr is trying to figure out if he can collect rent anyway and, if not, how he will make his mortgage payments. Who has the upper hand?
Continue Reading Commercial Leases Underwater from Harvey
Can Contracts be Terminated due to Force Majeure?
Forrest Gump and Lieutenant Dan committed Bubba Gump Shrimp Company to deliver 10,000 pounds of shrimp monthly to Wok Ann Chu-gumm Seafood Restaurants across the south. Unfortunately, the aftermath of a recent oil spill is likely to shut down Bubba Gump Shrimp boats all along the Texas Gulf coast. Forrest and Dan are worried they…