[av_textblock size=” font_color=” color=” av-medium-font-size=” av-small-font-size=” av-mini-font-size=” custom_class=” admin_preview_bg=”] The COVID-19 pandemic has caused business activity to grind to a screeching halt across the country. Business owners have been unable to generate revenue and some have been forced to close their doors for good. Business owners may wonder what their rights or liabilities are under certain contracts, such as leases, service agreements, and supplier contracts. If that contract contains a force majeure clause, then it may shed some light on the applicability of the pandemic to the contract. This article explains what a force majeure clause is and under what circumstances a force majeure clause in a commercial lease may be invoked due to the pandemic.
What is a Force Majeure Clause?
A force majeure clause (French for “a superior force”) is a contractual provision that relieves the parties from liability under a contract because a force beyond either party’s control prevents fulfillment of the parties’ obligations. They may also be called “Unavoidable Delay” or “Act of God” clauses and typically provide that, to the extent the force majeure event renders performance inadvisable, commercially impracticable, illegal, or impossible, the affected party’s obligations to perform under a contract may be suspended or excused.
Nearly all commercial contracts, including most commercial leases, contain some form of a force majeure clause. Generally, force majeure clauses contain a list of specific events that constitute force majeure. This can include strikes, lockouts, labor disputes, acts of God, acts of war, terrorism, and terrorist activities. Plus, it can include the inability to obtain services, labor, materials, or reasonable substitutes. There are also governmental actions, civil commotions, fire, flood, earthquake, or other casualty, and other causes beyond the reasonable control of the party obligated to perform.
If a contract is governed by Pennsylvania law, you want to remember that Pennsylvania courts narrowly construe force majeure clauses. As a result, it is best to have more events enumerated in the force majeure provision. The more events that are enumerated, the more likely a court will apply the force majeure language to your specified situation. Although the absence of a force majeure clause does not prohibit you from using other defenses to enforcement of the contract (such as “impossibility” or “frustration of purpose”), other defenses may not excuse performance like a force majeure clause can.
Does the COVID-19 Pandemic Constitute a Force Majeure Event in Your Lease?
Short Answer: It depends. The language of the contract or lease determines whether COVID-19 falls within the scope of a force majeure event under that agreement. As a result, the application of force majeure should be considered on a case-by-case basis.
If a clause in the contract or lease specifically lists “epidemics and/or pandemics” as a force majeure event, then a court is more likely to find that COVID-19 constitutes a force majeure event because the World Health Organization, the federal government, and many state governments have declared COVID-19 a public health emergency.
What if your lease did not specifically state “epidemics and/or pandemics” are force majeure events? You may still be in luck if your lease provides that any unexpected governmental action shall qualify as a force majeure event. Accordingly, a government-mandated quarantine or restriction on a specific business operation similar to the one instituted at the outset of the COVID-19 pandemic could be considered a force majeure event that prohibits either the tenant or landlord from performing their contractual obligations.
Recently, a court in Illinois determined that the Illinois governor’s executive stay-at-home order constituted force majeure in the context of the COVID-19 pandemic for the first time. As a result, the tenant was relieved from paying a portion of their rent obligation after the governor directed businesses to close in mid-March 2020. Despite the force majeure provision in the tenant’s lease expressly stating that lack of money was not a basis for relief, the court concluded that the executive order to shut down business amounted to a “governmental act,” which was expressly stated in the force majeure clause.
Therefore, the tenant was ordered to pay only 25% of the rent–the portion representing the carryout/curbside business the tenant was still able to operate while the executive order was in place. This is important because courts often look to other states when analyzing an issue for the first time and this Illinois ruling sets a tenant-favorable precedent for analyzing COVID-19 shut downs as “governmental acts,” activating the force majeure provision in a lease.
Additional Items to Consider
Even in the event of force majeure, commercial tenants likely have to pay rent. Commercial leases commonly carve out the obligation to pay rent and other monetary obligations from excusable obligations. It may also state that the tenant’s obligation to pay rent is independent from any of the landlord’s obligations under the lease.
Alternatively, the following non-monetary lease obligations may be excused by force majeure events: co-tenancy clauses (allowing you to reduce your rent if key tenants or a certain number of tenants leave a retail space), go-dark clauses (allowing you to stop operating in your space while continuing to pay rent), and operating hours requirements.
Additionally, a lease may require a party that wants to activate the force majeure provision to provide prompt written notice of the occurrence of a force majeure event to the other party. Even after providing notice, and regardless of the likelihood that a court would enforce a force majeure provision, each party is required to make reasonable efforts to mitigate damages.
The Future of Force Majeure Clauses
In the future, business owners should ensure that its commercial lease includes “viruses” and “pandemics” within the definition of force majeure and expand the force majeure clauses to excuse or suspend lease payments during the force majeure event. Business owners should strongly consider being represented by an attorney when negotiating and executing any major contract, but it may be even more necessary in today’s environment. Attorneys spend a lot of time staying abreast of updates to law and best practices, making them a good resource to protect a business owner’s interest while the owner focuses on operating the business in these unprecedented times.
[/av_textblock]
***DISCLAIMER: This article has been prepared and published for informational purposes only and is not offered, nor should it be construed, as legal or accounting advice on any specific facts or circumstances. The contents of this article are intended for general informational purposes only and you are urged to consult an attorney, or other professional, concerning any particular question that you may have.
[/av_textblock]
[/av_one_full]
Explore Categories
Privacy Policy
Last Updated: May 26, 2021
PIDC (“PIDC”, “we”, “our” or “us”) respects the privacy of its users (“User(s)” or “you”). This Privacy Policy is to inform you what information we collect when you visit our website(s) at https://navyyard.org/ and any additional websites owned and operated by the Philadelphia Authority for Industrial Development (“PAID”) at the PIDC (the “Site”) and when you use our downloadable mobile application (the “App”) and related public transportation information and additional services (collectively referred to as the “Service”). Capitalized terms which are not defined herein, shall have the meaning ascribed to them in our Terms of Use available at https://navyyard.org/ which this Privacy Policy is incorporated thereto by reference (together, the “Terms”).
YOU MAY ACCESS AND/OR USE THE SERVICE ONLY IF YOU FULLY AGREE TO THIS PRIVACY POLICY – AND BY ACCEPTING THIS PRIVACY POLICY, ACCESSING AND/OR USING THE SERVICE, YOU SIGNIFY AND AFFIRM YOUR INFORMED CONSENT TO THE COLLECTION AND PROCESSING OF YOUR PERSONAL INFORMATION AS DEFINED AND EXPLAINED BELOW. IF YOU DISAGREE TO ANY TERM PROVIDED HEREIN, YOU MAY NOT USE THE SERVICE.
Please note: you are not obligated by law to provide us with any information. You hereby acknowledge, warrant and agree that any information you do provide us is provided of your own free will and consent, for the purposes and uses described herein.
INFORMATION WE MAY COLLECT
We may collect two types of data and information from our Users. The first type of information is nonidentifiable and anonymous information (“Non-Personal Information”). We are not aware of the identity of the User from which we have collected only the Non-Personal Information. Non-Personal Information which is being gathered consists of technical information and behavioral data regarding the activity of the User on the Service, operation system and browser, type of mobile device, and operating system version and settings, User’s screen resolution, duration of usage of the Service, User’s ‘clickstream’ on the Site, keyboard language, etc.
The second type of information is individually identifiable information (“Personal Information”). This information may, in itself or taken together with additional information available to us, identify an individual, or may be of a private and/or sensitive nature. Personal Information we collect includes: username, email address, phone number, your geo-location, your travel habits (such as routes, times of travel from one destination to another), your home address, office address or other favorite destinations, public transportation lines, stations and/or routes you may have saved or searched for, User’s search history on the Service, User’s most-used routes and stations, all User-generated data, User’s reports and reviews regarding the Service, your in-app settings, your rank and user profile including your nickname and avatar, in-app usage scores (“points”) you receive for using the Services, Facebook Access Token, Google Sign-In Token, Advertising ID, User IP address, and any additional information which the User actively chooses to provide.
The geo-location information we collect includes detailed location and route information, including GPS signals and other information sent by your mobile device for which the Service is installed and currently activated. We use this location and route information to create a detailed location history all of public transit trips.
We collect such information via your use of the Service and through information which you voluntarily provide and/or upload to the Service as further described in this Privacy Policy below, for purposes of providing the Service, enhancing the User’s experience and personalizing the Service and security purposes as further detailed below and.
If you choose to use the Services via a User Account you may create such User Account via Facebook Connect, Google Sign-In, personal Email address or other social networks. If you choose to use your social media network accounts then we may also have access to your public profile, which includes your name, gender, profile picture, age group and residency.
For avoidance of doubt, any Non-Personal Information connected or linked to any Personal Information is deemed as Personal Information as long as such connection or linkage exists.
HOW WE COLLECT INFORMATION ON OUR USERS
There are two main methods we use:
Use of the Service. We collect Non-Personal and Personal Information when you access or use the Service. In other words, we are aware of your usage of the Service and may gather, collect and record the information relating to such usage. We also collect Non-Personal and Personal Information derived from information we receive from third party services and providers we work with.
Voluntarily Provided. We may collect Personal Information which you voluntarily provide when you use the Service. We may also collect information provided via your social network account in the event that you voluntarily choose to create a User Account via such third party social networks (like Facebook or Google+).
HOW WE USE YOUR INFORMATION
Your information is collected for the following purposes: (i) to provide you with and to operate the Service, including for statistical and research purposes and creation of aggregated anonymous data; (ii) to personalize the Service and content provided to you, to customize your experience with the Services, to suggest you with transport recommendations based on your preferences and to enable you to retrieve your information; (iii) to develop, improve and customize the Service, the experience of other users and the offering available through the Service; (iv) to be able to contact Users for the purpose of providing them with technical assistance, support, handle requests and complaints and collect feedback in connection with performance of the Services; (v) to send you updates, notices, announcements, and additional information related to the Service (vi) to be able to reply to User online queries in connection with performance of the Services; (vii) for customization and improvement of the Service’s accuracy and interface; (viii) to use such information for ours commercial purposes; (ix) to display or send to you marketing and advertising material when you are using the Service, including in accordance with the section titled ‘Direct Marketing’ herein and (x) to comply with any governmental agencies’ legal requests or court orders, and/or with any applicable law, rule or regulation. Any statistical, aggregated or anonymous data may be used by us at our discretion for any purpose.
SHARING INFORMATION WITH THIRD PARTIES
We will not share any Personal Information we collect with any third party, except in the following cases: (i) to satisfy any applicable law, regulation, legal process, subpoena or governmental request; (ii) to enforce this Privacy Policy and/or the Terms of Use, including investigation of potential violations thereof; (iii) to communicate with its Users regarding ours service; (iv) to detect, prevent, or otherwise address fraud, security or technical issues; (v) to respond to User’s support requests; (vi) respond to claims that any content available on our service violates the rights of third parties; (vii) to respond to claims that contact information (e.g. name, e-mail address, etc.) of a third-party has been posted or transmitted without their consent or as a form of harassment; (viii) to protect the rights, property, or personal safety of PAID, its Users, or the general public; (ix) if PAID is undergoing any change in control, acquisition or conveyance of all or substantially all of its assets; or (x) to collect, hold and/or manage your Personal Information through PAID’s authorized third party service providers, as reasonable for business purposes, which may be located in a country other than the country of your residency or location, that may not have the same data protection laws as your jurisdiction, as listed below; (xi) pursuant to your explicit approval prior to the disclosure; (xii) cooperate with third parties for the purposes of adding operational features to the Service, enhancing and personalizing the User’s experience, monetization and commercialization; or (xiii) to authorized third party service providers solely for the purpose of providing you with the Service. For avoidance of doubt, we may transfer and disclose or otherwise use Non-Personal Information or information which is linked to anonymous random identifiers or information that is aggregated in a nonidentifiable way, at its own discretion.
DELETION OR MODIFICATION OF PERSONAL INFORMATION
We retain Personal Information for such a period of time as is necessary in order for us to be able to use the Personal Information for the sole purposes described in this Privacy Policy and for the purpose of providing its Services under the Terms of Use. If for any reason you wish to modify or delete your Personal Information please contact us at: and we will make reasonable efforts to modify anonymize or delete any such Personal Information pursuant to any applicable privacy laws.
THIRD PARTY SOFTWARE/SERVICE
While using the Service we may be using third party software and/or service for various needs, inter alia, in order to collect and/or process the information detailed herein (the “Third Party Service Provider”). Note that these are independent software and/or service providers and we do not take any liability about the information collection policies of these providers, or about any kind of issue, legal or otherwise, relating thereto. Third Party Service Provider’s includes the following:
Facebook, which privacy policy is available at https://www.facebook.com/about/privacy/ (for purposes of FB Connect and use of developer tools such as FB Analytics offered by FB via the FB SDK)
Token Transit, which privacy policy is available here.
We may also provide additional transit-related services, including on-demand transit services, provided by its third party operational service partners (as they may evolve from time to time at our discretion). Such third party providers’ services include Gett, Uber and any other party, all of which are subject to a respective terms of use and privacy policies.
CREATING AN ACCOUNT USING SOCIAL NETWORKS
By signing onto our using your social network account (such as your Facebook account), you agree to provide us with information (including personal information) obtained from the social networks, for the purposes provided under this Privacy Policy. In the event that you create a User Account via your Facebook or Google social network account, we may have access to your public profile namely your name, gender, email address, photo, age group and residency. Your use of social networks to create your account is subject to the privacy policies and term of use of such third party social networks.
USE OF COOKIES
To make the Site work properly, when you visit or access our Site we use industry-wide technologies such as “cookies” (or similar technologies) in order to improve your user experience by enabling us to ‘remember’ you, either for the duration of your visit (using a ‘session cookie’) or for repeat visits (using a ‘persistent cookie’). In addition, we may use cookies in order to deliver ads relevant to you. By using or accessing our Site, you agree to our use of cookies. Most browsers will allow you to erase cookies from your computer’s hard drive, block acceptance of cookies, or receive a warning before a cookie is stored. Please note that by deleting or disabling future cookies, your user experience may be affected and you might not be able to take advantage of certain functions of our Site, therefore, your online experience may be limited.
DIRECT MARKETING
You hereby agree that we may use your contact details for the purpose of informing you regarding our products and Service, which may interest you, and to send to you other marketing material, transmitted to the email address or to the mobile device. You may withdraw your consent contacting us at: . We may also permit, solicit or contract certain authorized partners of PIDC to conduct advertising campaigns on the Services. In addition, PIDC may display advertisements via the Service. Such advertisements that you see when accessing the Service may be targeted on the basis of your geographic location and language. It is clarified that PIDC is not responsible for the content of said advertisements and the products delivered or services rendered thereby by third parties and you irrevocably and unconditionally agree that we shall not be held responsible or liable in connection thereof.
SECURITY
We take a great care in implementing and maintaining the security of PIDC’s Service and its User’s Personal Information. PIDC employs industry standard procedures and policies to ensure the safety of its Users’ Personal Information, and prevent unauthorized use of any such information. We cannot, however, guarantee that unauthorized access will never occur.
CHANGES TO THE PRIVACY POLICY
The terms of this Privacy Policy will govern the use of the Service and any information collected therein. PIDC reserves the right to change this policy at any time, so please re-visit this page frequently. In the event of any substantial change of this policy, we will make reasonable efforts to post a clear notice on the Site. Such substantial changes will take effect seven (7) days after such notice was provided on our Services or sent by email. Otherwise, all other changes to this Privacy Policy are effective as of the stated “Last Updated” date and your continued use of the Service after the Last Updated date will constitute acceptance of, and agreement to be bound by, those changes.
ADDITIONAL INFORMATION, COMPLAINTS AND CONTACTING US
If you have any questions (or comments) concerning this Privacy Policy, you are welcome to send us an email at: and we will make an effort to reply within a reasonable timeframe.
In the event that you wish to make a complaint about how we process your personal data, please contact us in the first instance at and we will endeavor to deal with your request as soon as possible. This is without prejudice to your right to launch a claim with your supervisory authority.
By contacting us you warrant and agree that you are free to do so, and that you do not provide us with information which violate any third party intellectual rights. Without degrading from the aforesaid, all rights, including intellectual property, arising from your communication with us will be owned by us and will be considered as our confidential material. It is clarified that any use of the information you are providing us will be done in our sole discretion, and is not obligated to use all or part of such information.
Heads up!
Clicking this link will send you to an external website.