Estate Planning Documents: Here’s What You’ll Need

Planning your estate is one of the ways to protect your loved ones in case of incapacitation or unexpected death. It gives you a sense of peace because you’re certain that your attorney or any other person you appoint will execute your wishes to your dependents’ interests.

Before getting started, consider speaking with an estate attorney to understand the best practices and whether any laws might conflict with your estate planning. Having legal counsel will also reduce your workload because they can process your estate planning documents, so all you have to do is review and sign.

Durable Power of an Attorney

When you’re temporarily or permanently incapacitated, you’ll want your affairs, especially financial, to be in good hands. A power of attorney document allows you to appoint a person you trust, such as your spouse, relative, or friend, to make those decisions in case of the unexpected.

Without this, the court might have to appoint someone to take the place, which could be time-consuming and expensive.

A Last Will

This is one of the most crucial documents when planning your estate. A last will and testament serves as a legal declaration of how you’d like your estate to be distributed should you not be in a position to give your wishes, such as terminal illness or death.

Your estate includes all the shareable property you own, such as vehicles, real estate, and business shares. To help your loved ones avoid the lengthy probate process, consider a plan for the non-probate assets as well.

Medical Power of an Attorney

The medical power of an attorney allows someone of your choice to make your medical decisions in case of mental incapacity or unconsciousness.

When drafting your medical power of an attorney, remember to sign the HIPAA (Health Insurance Portability and Accountability Act) release form so your appointee has access to your medical records as well.

Advanced Directives to Physicians

Besides being able to choose who can make your health decisions, you can also leave a document directing your last medical wishes. An advanced directive is a document that instructs your doctors on what kind of treatment you’d want and do not want in case you’re not in a position to.

This might include directives like a do-not-resuscitate order, the use of artificial methods to keep you alive, organ donation, among others.

Get Help from an Estate Lawyer

If you’ve considered planning your estate, now might be the time to do so. And if you’re looking for where to get started and how to process your estate planning documents, the attorneys at The Curry Law Firm are ready to help.

Simply arrange a consultation with us by calling 713-678-0013 or completing the form below with your contact details.

For easier organization and access, we also have a client portal where all your estate planning documents, including important calendar dates, can be found.

Who Can Claim Adverse Possession in Texas?

Did you know that a trespasser, neighbor, or a stranger can legally own property that was not previously theirs after using it for a specified number of years? This might seem unreal and extreme, but Texas, and even other states, allow it under the law of adverse possession. 

However, such claims are rare, and the most common ones occur between neighbors, involving a small tract of land often found at the borders. Most importantly, they are nearly impossible to navigate without the help of a real estate lawyer, which implies that you must be sufficiently prepared as the potential possessor.  

What Is Adverse Possession?

Adverse possession is a statute that gives legal title ownership of land to a trespasser over the original property owner. Typically, a trespasser who has lived on a piece of property for the required period files a title action and notifies the owner. If the owner fails to respond, then the land ownership rights can be transferred to the trespasser. 

What Do I Need to Prove for Adverse Possession in Texas?

Anyone of legal age can claim adverse possession as long they can prove, among other things, that their possession is:  

  • Exclusive   You have solo possession of the property as opposed to shared possession with an owner or any other party.
  • Hostile – Your possession was done through appropriation and without the owner’s permission.
  • Continuous – You’ve continuously possessed the property for the established statutory period as opposed to taking breaks or sporadic ownership. However, the court might still allow you to file an action if there were successive possessors and privity of estate exists among them.
  • Visible – You’ve been openly using and possessed the land openly and without concealing your occupancy.
  • Actual – You  possess the property and have been exercising control.

Statutory Limitations for Adverse Possession

To level the playing ground, the court has outlined a minimum period by which the trespasser must have possessed the land, as well as other requirements, to qualify for an adverse possession claim in Texas. 

A trespasser can file this action after three years of using and occupying the property, as long as they have a color of title. This refers to a title or conveyance that might have been mistakenly but legally issued.

You can also claim adverse possession after five years of property possession if you have a color of title, have proof of land cultivation, and you’ve been paying taxes for the property.  

There’s also a ten-year statute that does not require any title or conveyance as long as you can prove all possession standards like exclusivity and visibility of occupancy. 

Consult a Real Estate Lawyer

Adverse possession suits can be difficult to handle, and only a few of them go through. At the same time, each case is unique and with different circumstances, which means that you should still try to file a claim if you feel that you qualify for adverse possession. 

Start by speaking with a real estate lawyer to understand the strength of your suit and how to proceed with the case. Call The Curry Law Firm at 713-678-0013 or send a message through our contact form for a free consultation

How to Start a Franchise

The good thing about starting a business is that there are several ways to do it. You can start a venture from scratch with an idea and capital, buy off an existing business, or set up a franchise. 

In a franchise, an individual or business (franchisee) pays an agreed fee to another already-established business (franchisor) for permission to use their name, brand, and model. Starting a franchise is likely to work because the franchisor provides you with resources like training, launching support, and marketing to get started. Some franchisors may even offer financial assistance. 

Thinking of setting up a franchise? Here are some of the most important things to get you started. A business lawyer can also help answer your questions.

Is a Franchise Right for You?

Before you start a franchise, consider both the pros and cons, as well as common challenges you’re likely to encounter. Are they worth it? Are you prepared to work with the franchisor or would you rather work alone?

Most importantly, evaluate the total cost you’ll need to get started, along with the legal requirements. Consider finding a business formation lawyer at this point because they understand this better and can guide you on the right path.

Choose Your Preferred Industry

The most popular industry for franchising is restauranteering with multinational companies like McDonald’s and Taco Bell. However, there are other numerous industries you can choose from, depending on your interests. 

Determine which industry matches your skills and passion, and then research available franchising opportunities. 

Review the Franchise Disclosure Document

A franchise disclosure document (FDD) is a legal document provided by a franchisor. It contains all the important information that a franchisee requires to make an informed decision. 

The most common items you can expect in an FDD include:

  • Initial fees
  • Bankruptcy information
  • Franchisee requirements and obligations, 
  • Territorial rights 
  • Proprietary information
  • Contracts, and so on. 

To safeguard your rights as a franchisee, review this document with your business lawyer so that you know whether to go ahead.

Establish a Corporation or LLC

Incorporating a business makes it a legal entity with liabilities and so on. This also protects your personal assets in case of litigation, and your corporation might even qualify for a tax relief that’s not available to businesses under sole proprietorship

Your business will also look more professional to prospective franchisors and customers.

Select the Right Location

Next, determine the most ideal location to set up your franchise. Some franchisors will advise you on the best locations and store size, depending on their existing models.

However, the franchisee is responsible for things like buying or leasing properties and getting into agreements with landlords or sellers. Here, you might be better off with a lawyer who’s knowledgeable on everything real estate. 

Talk to a Business Lawyer Early Enough

When you’ve decided to start a franchise, the next best thing you should do is get in touch with a franchise lawyer. Despite it being easier than other models, there still are numerous legal issues that you need to sort out before getting into an agreement and launching a franchise. Speak with a business lawyer from the beginning to protect your rights and ensure a smooth sail. 

Get professional legal representation at The Curry Law Firm when you call our offices at 713-678-0013 or submit the contact form below with your details. 

 

 

 

Texas Landlord FAQ

Landlords always write leases for their own benefit. Fortunately, because commercial leases differ vastly from the sort of cookie-cutter restrictions that residential landlords impose, there’s no reason to avoid pushing back on some of the less-agreeable clauses in your commercial lease. 

Not all terms on a lease may be favorable, but you can at least protect yourself and your business from being taken advantage of by engaging an experienced real estate attorney to review your commercial lease. 

Texas Commercial Leases and Landlords FAQ

Check out the below FAQs to get a sense of some of the main questions our clients have. Then, reach out to a commercial real estate attorney with The Curry Law Firm to get your questions answered. 

Is it possible to get out of a lease early?

It’s vital to always check the termination clause in your lease before considering ending your lease early. In most cases, you’ll likely be on the hook for the remaining balance of your lease. This means that if you try to vacate a twelve-month lease after just nine months, you could be stuck paying the difference. Negotiate for a shorter lease, or go over the language with an attorney if you foresee the need to end a lease ahead of time. 

Can you sign a commercial lease under your own name?

If your business has more than a sole proprietorship corporate structure—for example, an LLC—then you should sign the lease in the name of your business, and not your own name. Sole proprietors must sign the lease under their own names. 

Is it possible to negotiate for better terms in a commercial lease?

Yes. Although many folks used to signing residential leases aren’t aware or able to do this, commercial leases are fundamentally different. As such, they reflect an understanding between the tenant and landlord, and the tenant doesn’t have to accept terms they deem unfavorable. However, any changes must be agreed upon and detailed in writing to become enforceable and legally binding. 

What points are commonly negotiated in commercial leases?

Some of the most common changes that tenants request made to commercial contracts are:

  • Changes in the duration of the lease
  • Common area maintenance charges and other requirements
  • Deposits
  • The amount of rent
  • Facade features, such as sign allowance

What happens if I have a dispute with my landlord?

Review the terms of your lease to see how to proceed with the dispute. There could be consequences for disputes or noncompliance with the terms of the lease. For example, a landlord is able to lock you out of the property for nonpayment of rent. 

Commercial leases can be tricky, but an experienced attorney with our firm can help you and your business secure the best terms possible for your next commercial property—freeing you up to focus on growing your business. 

Let a Real Estate Attorney Review Your Lease

Want a second pair of eyes on your business’s lease? The Curry Law Firm can help you negotiate favorable terms. 

Call us at 713-678-0013 or fill out our contact form to learn more. 

What Can a Real Estate Lawyer Do for a Seller?

Unlike commercial real estate buyers, most sellers do not put much thought into hiring legal support for the sales process. They may believe that they don’t have much to lose, unlike their counterparts.

But this couldn’t be further from the truth. Commercial real estate transactions are riddled with risks for both the buyer and seller. Besides protecting your rights, an attorney can perform tasks that require the advanced legal knowledge and skills of a professional.

Why does a commercial seller need a Houston real estate lawyer?

Removing Judgment on a Lien

A lien judgment is an order placed on a property by the court, allowing a creditor or lender to repossess the real estate should the owner forfeit their debt obligations. This can spell disaster for your selling plans and even put off potential buyers.

If you cannot afford to pay off the debt right away, a real estate lawyer can work out a plan to get the lien removed or propose an arrangement that allows you to sell.

Listing Agreements

When you list your commercial property with a real estate broker, they’re likely to give you a listing agreement to sign. Most sellers sign this document without a second look, which is a mistake that can haunt you later.

Issues such as the commission percentage and when this should be paid are often a source of contention between brokers and sellers. To prevent disputes, have an attorney go through the contract before signing.

Overseeing the Paperwork

Besides the listing agreement, there are numerous other documents involved in a real estate sale. Some require drafting, others reviewing, and others filing with relevant authorities. 

An experienced lawyer will know what paperwork you need and what provisions to look out for while reviewing, as well as the deadlines to file official documents. 

Ensure That You Get a Good Deal from the Sale

When making a commercial real estate sale, it’s likely that the buyer will have strong legal counsel to support their best interests. You should have one, as well.

A real estate attorney can not only negotiate the sale amount for you but also various clauses in a contract so that you’re getting the best deal.

Get the Help of a Real Estate Lawyer

There’s a long list of other things that a real estate lawyer can do for you as a seller. Commercial real estate sales are not straightforward, and making a successful closing might depend on your legal representation. The Curry Law Firm has an offer for a free initial consultation to review your property and chart your best way forward. 

To speak with a real estate attorney for free, call our offices at 713-678-0013 or fill out our online contact form.  

Trust 101: What are the Basics?

When people hear the term trust, in reference to estate planning, they often assume that only the wealthy or those with complicated estates need one. However, that is far from the truth. There are many benefits that a trust can provide for those who would be considered “average” folks or simply those who are not extremely wealthy and don’t have complicated estates. Such advantages include tax preferences, avoiding probate matters, and managing assets for beneficiaries’ benefit.

Trusts are highly versatile vehicles used to protect assets for the present moment, as well as into the future, long after the original asset owner’s death. Trusts can include various assets, such as cash, investments, and real estate property. Under a trust, a trustor, also known as a settlor or a grantor, gives another party, the trustee, the right to hold title to property or assets in the manner instructed by the settlor for the benefit of a third party, the beneficiary. Trusts are established to provide legal protection for the trustor’s assets to make sure that those assets are distributed according to the wishes of the trustor.

There are several types of trust, but they all boil down to whether the trust is living or testamentary, revocable or irrevocable, and funded or unfunded. So, let’s break down what these terms mean.

Testamentary Trust: A testamentary trust, also referred to as a will trust, is a trust that is created upon the death of the grantor.  These trusts are detailed in one’s last will and testament. Testamentary trust, unlike living trust, are irrevocable and are subject to probate court because the trust itself does not come into existence until the will has been probated and the executor settles the estate.  Until one’s death, a grantor may change, amend, or modify a testamentary trust during the testator’s lifetime because it does not actually exist yet.

Living trust: A living trust, also referred to as an inter-vivos trust, is one created by the grantor while they are still alive in order to name the beneficiaries of property and assets upon death. Under this type of trust, assets are passed outside of probate court, which is the judicial process wherein a court appoints an executor to carry out the provisions of a will. These trusts may be revocable or irrevocable, which will be further explained below.

Revocable Trust:  A revocable living trust is an estate planning trust that deeds property to an heir but allows the grantor to retain control over the property during his or her lifetime. As such, the grantor may use, spend down, buy, and sell assets from the trust while living. Additionally, the grantor may dissolve the trust at any point.  Upon the grantor’s death, the property passes to the beneficiary, avoiding probate court. While the revocable living trust does not provide tax savings for the grantor during their lifetime, the trust becomes ‘irrevocable’ upon death since the grantor is no longer living and available to amend it or dissolve it, and the beneficiary is then entitled to tax advantages.

Irrevocable Trust: An irrevocable living trust is an estate planning trust wherein the grantor does not retain control of assets or property. These trusts are also funded with cash or other assets at the time of its creation. This immediate transfer of assets or property into the trust creates certain tax advantages and other benefits for the grantor. An irrevocable living trust may also be used to avoid probate matters.

Another important factor of an irrevocable trust is that the grantor cannot legally act as trustee of an irrevocable trust and can never take their property or money back from the trust unless they’ve named themselves as a beneficiary and set terms of distribution for themselves.

Funded Trust: A funded trust means that the trustor has not only listed specific property and assets in the trust, but has also transferred something into the trust. To do this, one must physically change the titles of their assets from their individual name (or joint names, if married) to the name of the trust. You will also change the corresponding beneficiary designations to the trust.

Unfunded Trust: An unfunded trust is a trust that has been established but has not been funded with any significant assets. An unfunded trust may work in conjunction with a last will and testament or a pour-over will. However, using these methods can result in complicated circumstances. If a trust remains unfunded at death, the assets and property will not be distributed per the guidelines of the trust.

Trust and estate planning is a complex matter. You can in fact create multiple trusts or a single trust and they do not have to follow the typical flow of things. For example, you can direct your living trust to create a testamentary trust in light of having a will. Similarly, you can effectively, have a living trust, testamentary trust, and a last will and testament based on your needs and desired structure.

Because of the complexities of estate planning, when considering a trust always seek professional advice. Consult with an attorney to ensure the protection of your assets for your benefit, as well as that of your loved ones. We at the Curry Law Firm are here to assist you with developing an estate plan that fits your unique needs. Feel free to contact us today via email or phone to schedule a consultation.

The Curry Law Firm LLP provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Readers should not act upon this information without seeking advice from professional advisers. 

© The Curry Law Firm

Conditional Inheritance through Wills and Trusts

Many people often wonder what kind of guidelines and stipulations they can include in their will and trust. While it is the court’s objective to carry out the wishes and intent of a testator (person who made a will) or a settlor (person who made a trust), there are some conditional provisions that will not be upheld by the court. Certain conditional provisions that are not honored are those that go against public policy. Such conditions may negate or limit a person’s inheritance if they marry a person of a certain age, religion, or race.  Likewise, rules that surround whether a person divorces and their eligibility for an inheritance, that would otherwise be bestowed to them, is also often invalidated by the court. Another condition that goes against public policy, is a stipulation concerning a recipient’s religion. Such conditions will not be honored if it keeps a beneficiary from receiving an inheritance otherwise left to them.

Furthermore, in light of public policy, although it is uncommon you cannot include an illegal condition or purpose for the gift. This would invalidate either all or part of the will or trust. For example, if you live in a state where marijuana is not legal you cannot bestow land for the purpose of growing marijuana. You can also not incite illegal actions, such as “To Tom, so long as he drinks his first beer before 21 years old.”

Additionally, any rules that would violate rules against perpetuities would not be upheld. Although it is not a simple concept, in short, the rule against perpetuities provides that certain future interest must vest, if at all, within 21 years after the death of a life in being at the time that the interest is created. The purpose of the rule is to prevent a person from drafting any kind of transfer agreement that would control the ownership land for an excessive period of time after one is deceased.

You can include conditions in wills and trust that surround age, education, or (legal) purpose. For example, the trust that my grandmother left me, and my siblings stated that we could not have access to our portion of the trust until we each respectively reached the age of 25, unless for educational purposes. Other examples of conditions that are upheld by the court may include “to Gabrielle so long as he uses the property as a dance studio” or “To Mark, if and when he graduates from college”.

However, it is important to keep in mind that it is more common for gifts/ assets to be distributed through trust rather than wills, considering the nature of wills. Assets from wills are generally distributed soon after death. As such, it is most common for inheritance from a will to be given based on the circumstances at the time. Whereas with trust, they are developed and equipped to hold assets for an extended period of time.

It is also critical to keep in mind the efforts and actions that the executor (person who carries out the terms of the will) or trustee (the person in control of the trust) will have to do in order to manage assets until the set conditions are met. Be specific and think through the reality and various occurrences that may take place. Consider fees and expenses that may incur during the potential timeframe where the assets are in waiting. Establish terms to handle the assets if the conditions are never met or not met within an established period of time. In this scenario, the designated beneficiary may never receive the assets, which may then be distributed to a contingent beneficiary or charity.

When conditional provisions are not well thought out and articulated in a will or trust it creates ambiguity. Such vagueness opens the door for all kinds of litigation between the beneficiary and executor or trustee. This frustrates one of the primary purposes of a will and trust, which is to clearly identify one’s wishes and intent to provide their family and loved with peace of mind without having to guess and fight over assets.

Figuring out the right amount of information to put into a will or trust can be confusing and is a delicate topic. Although courts are not favorable of contingent will provisions, their main priority is to honor the will or trust maker’s intent as best as possible and within the bounds of the law. The attorneys at The Curry Law Firm are here to ensure that your intent is clearly written within the most suitable document and carried out at the proper time. We provide guidance and establish an estate plan that meets your specific situation. If you or a loved one is thinking about drafting a will or a trust, the attorneys at The Curry Law Firm are here to help.

Estate Planning Needs in the Midst of COVID-19

Estate planning is always important, but a global pandemic definitely accelerates the need to have one today. COVID-19 has forced us to face the reality of our own mortality and consider several “what ifs” that were previously never considered, or just situations that nobody ever likes to think or talk about. Such what ifs involve physical incapacity and even death. To ignore these events as if they could never happen, is a pretense that we cannot afford, and it is better to be prepared than to not. Most people think only the elderly need an estate plan, but in fact we all do – single, married, divorce, parent, sibling, homeowner, business-owner, and the list goes on.

More than 5,000 people have died in the United States within a two week span due to COVID-19. Unfortunately, this number is only going to increase. And although we take the utmost safety precautions, this virus is still spreading and impacting the lives of many.

Do not take your health for granted or think that your tomorrow is guaranteed. It is important to consult with an attorney to determine the specific needs for your estate plan, but at a minimum it should the following:

  • Last Will and Testament: This document allows you to control how your estate will be distributed when you pass away. It provides your family with peace of mind in knowing how and to whom you want your assets allocated. A will also establishes who should be responsible for managing the affairs of your estate, and this person is designated as the Executor.
  • Financial Power of Attorney (POA): This is also known as a Statutory Durable Power of Attorney and this person is appointed to represent your monetary assets and interest. This person will be able to act in the event that you are unable to, so long as you are still living. The decisions that they make are binding as if you made the decision yourself.
  • Medical Power of Attorney: This document authorizes someone to make medical decisions on your behalf. This person is only able to step in as a medical agent if it is determined by your doctor that you are incapable of making such decisions, or you are unable to communicate your wishes, for example if you in a coma.
  • Health Care Directive: This is also commonly referred to as a Living Will. Here will you state what decisions you want to be made in the event that you are unable to speak or communicate for yourself. It is a written document that expresses your wishes about your health care in the event you are diagnosed or suffer with a terminal condition, irreversible vegetable state, or end stage condition. It also makes your organ donor status known and provides your wishes concerning any other health directives that you wish to control.
  • HIPPA Authorization: This authorizes medical staff and insurance agencies to share your medical history and HIPPA protected information with the designated person. It is important that your Medical Power of Attorney be listed so that they will be well informed of your medical history when making decisions on your behalf.
  • Guardianship for Minors: This is important to have if you are a parent or guardian of a minor(s). A guardianof a minor is a person that has the powers and responsibilities of a parent concerning the child’s support, care, education, health, and welfare. A minor is any child under the age 18 years old.

When selecting people to fulfill these roles and act on your behalf it is important to choose people who are responsible and wiling to act in your best interest. For medical concerns it may also be important to select someone who lives in close proximity to you, in the event they need to meet with doctors to discuss your medical options.

If you already have an estate plan, then that is great. However, you should review it every two years to account for current assets, as well as the current status of relationships. All estate plans require ongoing maintenance.

It is also imperative to review and update as necessary beneficiary designations on retirement accounts and life insurance policies. Holders of these accounts should be able to change beneficiaries online.

The Curry Law Firm LLP provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Readers should not act upon this information without seeking advice from professional advisers.

 © The Curry Law Firm

COVID-19 and Contractual Obligations : Tips for Managing Risk and Liabilities during a Viral Pandemic

As the world adjust to the outbreak of the new COVID-19 virus, businesses and individuals have been and will continue to be impacted. From production to performance, many companies have become unable to fulfill contractual obligations, as a result of supply shortage, city closures, and lack of labor due to safety precautions. As such, these companies are left wondering what legal remedies and recourse they have with respect to business affiliates.

As with any contractual manner, it is going to come down to what was contracted and mutually agreed upon by both parties. In this instance, we have to put the spotlight on the contract’s force majeure clause. A force majeure clause excuses one or both parties for nonperformance under a contract when certain events, as detailed within the clause, occur.  These events are often outside of the party’s control and severely impact their ability to meet the terms of the agreement. Many businesses have asserted that COVID-19 has impacted their ability fulfill their contractually obligations, and as such they should be absolved of any financial or legal responsibility. While business may be restricted because of this global health crisis, a pandemic does not automatically give rise to a valid force majeure defense under every contract and every circumstance.

To determine a business’ rights, obligations, and remedies, when they are unable to perform or meet the terms of an agreement the non-conforming party should consider the following:

Has there been a Force Majeure Event under the terms of their contract?

To determine contractual intent and if an force majeure event has occurred, first look at the specific list of events that are included within the clause that would release a party from their responsibility. Although each clause should be tailored to fit the specific purpose of the contract, most clauses include an act of God as a force majeure event. Many would think that a global pandemic would fall under this category, but that is arguable because of the varying definitions by jurisdiction and the principle of sole causation.  The act of God reference as it relates to a viral pandemic is different from other occurrences, such as flood, because here the parties have to determine if it is the virus itself that precluded performance or people’s response to the virus that precluded performance. Whereas, when there is a flood and a facility is now damaged or roads are not drivable, that is a clear act of God where the flood is in fact the sole cause for lack of performance. The act of God provision may cover this instance, but it is always best to have an event specifically included. Having a clause that explicitly references epidemics or pandemics would be most beneficial.  However, prior to COVID-19 this event was rarely included in contracts outside of the health industry. Other events that may be listed and at play as a result of COVID-19 are government order or authority (i.e. A mayor implementing a Stay Home Order) and national or regional emergency.

Furthermore, many force majeure clauses include a catch-all provision. However, the catch all provisions are only applicable for unforeseeable events and those that are similar in kind to the other events included in the clause. For example, if the list includes “riots, fire, strike, and any other event” , the “any other event” would not extend to government order or pandemic outbreak, because they are not like in kind to the examples provided. “Other events” cannot be greater or superior in quality, or different than the specifically detailed terms within the clause.

However, even if your contract does not specifically include these events or a force majeure clause there may be some recourse for nonperformance. Outside of force majeure we may see companies finding remedies based on the underlying doctrine of frustration of purpose, impossibility, and commercial impracticability. If not included in the contract itself these principles may be implied and applicable under applicable state contract law.

When do you invoke the force majeure clause?

Many contracts with a force majeure clause will include some level of interference that a party must experience before invoking the impact of the force majeure under the terms of the agreement.  Guidance on when to invoke the clause varies across contracts, but again first start with what the contract actually says. Some common points of invoking are when the party is prevented or hindered from complying, or when the act becomes:

  • Illegal;
  • Impossible;
  • Impracticable; or
  • Not reasonably possible.

There are many factual considerations that drive this analysis and its applicability. One must assess what their obligations are and to what degree, if any, they can they reasonably comply. For example, if you have a planned event with attendees of more than 10 people, that may now be illegal, as well as not reasonably possible, based on recent governmental authority and order.  Yes, you could still have the event for just 10 people, but that would not be reasonable and pulls on the underlying doctrine of frustration of purpose.

Is notice required?

As with all other terms of the contract, the notice requirement of a force majeure is going to vary depending on what was contracted. This notice alerts the other party of your nonperformance and why.  Failure to give notice as instructed could negate a party’s right to assert a force majeure defense for failure to comply with the terms of the contract.

Some common provisions concerning proper notice include:

  • Within “x” days of an event of force majeure;
  • Reasonably prompt;
  • Promptly;
  • As soon as practicable; and
  • Immediately.

These different formulations of notice are significant as they connect to a business’ legal strategy, what event led to the party claiming force majeure, and when did that event start. As this relates to COVID-19 there are many recent events that could give rise to a force majeure event.  Such events for considerations include, the travel ban, restrictions on gatherings of more than ten people, statewide emergency, or other event. It is important for a business to understand its legal rights and implications when asserting the event of force majeure, proceeding with notice within the proper timeframe, and then canceling with any other affected parties. This sequence of events matters to curtail any counter defense that may arise to negate that the alleged force majeure is not in fact the actual reason for nonperformance.

Final Thoughts

 Force majeure clauses do provide some contractual relief for parties that are unable to perform. However, it is important to clearly define the event of force majeure, invoke it timely, and provide proper notice. Furthermore, if a contract does not have a force majeure clause there are other options of recourse, but still communicate with the other party and provide notice for any inability to perform. It is likely that this global health crisis will impact the judicial analysis of force majeure clauses. Going forward the law and contracts will be written with COVID-19 as hindsight 20/20. But for those with current contractual obligations it is important to stay abreast of your legal rights and remedies. If you are unable to perform contractual obligations, please review your contract for possible relief and act timely. Mitigate damage if you can and consult with an attorney as soon as possible to ensure that your rights are protected, and remedies properly executed.

The Curry Law Firm LLP provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Readers should not act upon this information without seeking advice from professional advisers.

© The Curry Law Firm