Business Issues in the age of Covid-19

Last Week Governor Wolf issued an Order closing all non-essential or non-life sustaining businesses in Pennsylvania. Making matters worse, the Governor later issued a shelter in place Order for Philadelphia and the surrounding counties including Bucks, and Montgomery Counties. This has made common everyday business a challenge even for the most prepared business. The good news is that through the advent of technology many businesses can continue uninterrupted, remotely. If you are now a virtual or remote business, what can you do to help ensure your success?

First, you should double check to make sure that the Governor’s Order to close all non-essential or non-life sustaining businesses even applies to you. Most people just assumed it did. However, like many Orders, this one came with a number of exceptions. First, go to www.pa.gov to see if the exception applies to your business. You may be surprised how many businesses qualify under the exceptions. If your business does not fall under the exceptions you can request a waiver to keep your physical location open.

If the exception applies to your business, you still need to conduct business in a safe manner to ensure the health and safety of you, your employees, your customers, and the general public. The Centers for Disease and Control has issued Guidance for Businesses and Employers on best practices. This list can be found at www.cdc.gov. Be familiar and follow these guidelines.

If you are forced to conduct business remotely because your business does not fall under an exception to Governor Wolf’s Order, and you can’t get a waiver, you should take some steps to ensure that you are entering and performing your obligations under any contracts and conducting business appropriately in a remote environment.

Limited Liability Corporations and Incorporated businesses are owned by members or stockholders respectively. These “owners” often need to participate in meetings or take action on behalf of the business. Before taking any action, you should consult your company’s Operating Agreement (LLC) or Bylaws (Corporation) to see if these “owners” can hold meetings remotely. If not, you need to include this authority in these documents. Don’t have these documents? Then you better draft them as these govern how your business is run. When you draft them, include provisions to allow for remote meetings.

In this age of technology it has never been easier to work remotely. No longer do you have to be face to face to create, enter into, and perform contracts. The law recognizes that contracts can now be signed electronically. This is very helpful when you have to practice “social distancing.” If you are going to sign a contract electronically, make sure that both parties agree that the contract can be signed electronically. Both parties should agree that an electronic signature is appropriate and reliable and be sure that you have a way to prove the signature is authentic.

Contracts often must be performed in a finite period of time. This time period is often calculated as “business days”. Look throughout the contract to make sure you are aware of the specific business days that you have to perform and that these days are consistent throughout the contract. In this age of forms and cut and paste, the days may not always match in a contract. You need to ensure that you know the exact number of days to perform and take steps to meet that deadline. If you have a contract that needs to be performed during the Covid-19 crises, make sure that you will be able to perform the contract while you are stuck at home or working remotely. If you can’t, contact the other party right away to work out alternate arrangements or to put them on notice that you may have difficulty.

Many commercial contracts have a “force majeure” clause to them. This clause describes what will happen under an extreme circumstance. An extreme circumstance is often an act of God such as an earthquake, hurricane or other natural disaster that would render performance almost impossible or impracticable. The Covid-19 crises will probably fall under this clause. If your contract is impacted by the Coronavirus you will probably still need to comply with the contract. You can’t just walk away. Under the theory of fairness, you should use your best efforts to comply when you are able to. Let the other party know when you can reasonably comply. Check your clause though to make sure it does not cancel the contract altogether.

If the force majeure clause doesn’t apply, or if it does and you will still try to comply, you should do the following: first, notify the other party of your difficulty and your intent to comply and when you think that will be. Many people could resolve many problems if they just communicated. Second, document all of the circumstances leading up to the current situation just in case you need to recall them later. Third, mitigate your losses. This applies to both parties. The courts usually favor those that try to mitigate their losses.