By: Coleman Jackson, Attorney & Counselor
April 29, 2020
What is a Contract? A contract is an enforceable promise under the law. That means that if you agree to do something for consideration and the other party either performs or changes their position in any material way, the law will compel you to do what you promised to do or demand that you pay the performing party compensation of some kind. Usually the compensation is going to tailor the party’s expectations at the time they agreed to do such-and-such. In a nutshell, that is what the term contract means.
What about when Covid-19 says go home, stay there and I will let you know when you can come out again? Contracts are based on expectations; or put another way, a contract is a bargained for outcome. Sometimes parties insert a clause into their contracts that is called a ‘force majeure’ cause. Don’t get lost in the foreign language… force majeure is French. First thing you really need to know is that force majeure clauses in contracts are enforceable in Texas. Texas will make the parties to contracts perform in accordance to what the force majeure clause says. That is simply in keeping with the fundamental contract law in Texas; which is, consenting parties can pretty much agree to do or not do any lawful thing in the State of Texas. So be careful about what you agree to do or not do in Texas. What about enforcement of force majeure clauses in Texas: first they are enforceable contract provisions; your contract must contain language that a court can construe as a force majeure event excusing your performance of your obligations under the contract. Parties to contracts in Texas can define or describe situations, occurrences, or events that constitute a force majeure event and typically they are defined as some event or series of events that make it impossible to perform under the contract or impractical to perform under the contract. But a mere difficulty in performance would not likely be reason for a party to fail to perform under the contract. Parties to contracts in Texas must make all reasonable efforts to perform responsibly under their contracts. What constitutes reasonable efforts depends upon the nature of the contract because the scope of a force majeure clause in a contract depends upon the benefit of the bargain the parties negotiated within the four corners of their contract. Courts in Texas do not like to take the liberty of contract away from responsible contracting parties afforded to them by the Texas and United States Constitution. So, it follows that if the parties did not bargain for force majeure, it is highly unlikely that Texas Courts will recognize an event or series of events out of its own clothe that would excuse or release parties of contracts without the possibility of paying damages. In a nutshell, force majeure is a lawful bargained for excuse to not perform under the contract.
An unexcused failure to perform pursuant to the agreed upon bargain is called a breach of contract when a party’s failure to deliver what’s promised is material to the expectations of the parties from the start. In a nutshell, breach of contract damages could be a reasonable option or perhaps even the only option for a party if it becomes impossible or impractical to perform obligations of contracts entered into before the Covid-19 Pandemic sent the global economy to the dog pound.
This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader. You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.
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