COVID-19 and your Commercial Lease

These unprecedented times have given rise to much uncertainty. As we continue to adapt, commercial tenants and landlords have many questions since all non-essential businesses have been asked to close down. The main concern is regarding the impact of COVID-19 on commercial leases. A good place to start for this discussion is to explore the concepts of force majeure clauses and the doctrine of frustration of contracts.

What is a force majeure clause?

A force majeure clause is a provision that is included in most commercial contracts or lease agreements. It may allow one or both parties to defer or terminate performance of their obligations as a result of a specified event that is outside of their control. These events could include:

Acts of God (E.g. natural disasters like earthquakes and tornados)

Public health emergencies (E.g. epidemics and pandemics)

Government action (E.g. lockdowns/forced closures and changes in the law)