woman looking over a contract

Nonperformance, Breach of Contract, and Covid-19

COVID-19 has fractured business and commercial enterprises on a global scale. Economic uncertainty abounds, and businesses are scrambling to make adjustments and remain solvent. 

Under the weight of new and ever-shifting COVID-19 restrictions, many businesses are vulnerable to lapses in performance and contractual obligations. South Carolina business attorneys are likewise adjusting to advise clients about their exposure and risks regarding non-performance, breach of contract, and COVID 19. 

Is COVID-19 an Excuse for Non-performance?

While COVID-19 has wreaked social and economic havoc on a global scale, it is not necessarily a get-out-of-jail-free card for non-performance and breach of contract. While contract terms and common law may provide some defense against performance breaches, a more specific examination of individual contracts is necessary to determine if defenses exist. 

Analyzing Contracts in Response to COVID-19 Breaches

A few of the ways to analyze contract breaches concerning COVID-19 are the following:

Contractual Rights and Obligations

Any business impacted by COVID-19 should carefully examine their contracts to determine the parties’ rights and obligations. Both parties may bear fault, and each party should shore up their position and ensure compliance to the greatest extent before assigning blame against the other party. 

When analyzing contracts in the face of non-performance or breach of contract, parties should take note:

  • Does the contract contain a force majeure provision?
  • Does the contract or force majeure provision detail the types of catastrophic events that may interrupt operations and obligations? 
  • Is there a required notification process whereby other parties must be informed when such an event and an interruption of performance occurs?
  • Are common-law doctrines applicable?

Finally, it is critical to ascertain the extent to which COVID-19 be directly linked to the company’s non-performance or breach of contract?

Force Majeure

Many commercial contracts contain a provision to excuse or suspend performance in the face of an uncontrollable, extraordinary event. This provision is known as Force Majeure or, more commonly, the “Act of God” provision. 

Force Majeure is not in itself a defense against breach of contract. It is, instead, a provision to allow temporary relief from performance under uncontrollable and significant events:

  • acts of war
  • terrorism
  • natural disasters
  • epidemics

Again, while one may argue that the global coronavirus pandemic fits as a force majeure, contractual force majeure provisions generally allow temporary relief, not permanence breach, of contractual obligations. In the absence of a force majeure defense, the common law Frustration of Purpose Doctrine and the Doctrine of Impossibility may still provide some protection. 

Common-Law Defenses

The Frustration of Purpose Doctrine has long been held in South Carolina courts to be a viable defense for breach of contract only if the principal purpose of the party making the contract was substantially frustrated, and that the absence of the frustration was anticipated at the time the contract was entered into.

The Doctrine of Impossibility is perhaps a greater defense against non-performance and breach of contract than the frustration of purpose. Long-held to excuse performance when impossible acts of God or the other party interfere with contractual performance obligations, the Doctrine of Impossibility may provide a defense for COVID-19 related breached performance. 

South Carolina Business Attorneys, COVID-19, and Your Business

The full impact of COVID-19 and resulting commercial restrictions have yet to be felt. In uncertain times, you need a business attorney to help you navigate contractual obligations between you and your counterparts. South Carolina’s robust business sector has not been immune to the negative effects of COVID-19 regulations heaped on businesses and communities, state and nationwide.

Take steps today to protect your business and economic relationships. Contact our office to speak with an experienced South Carolina Business attorney about surviving the COVID-19 marketplace. 

Personal Injury attorney shaking hands with client

Is a Verbal Agreement Enforceable in South Carolina?

Contracts are a key legal document used every day in business. A contract protects the interest of all parties by reducing their agreements to writing. A contract that meets all legal requirements is legally enforceable, which is vital when transacting business. However, is a verbal agreement ever enforceable in South Carolina? Our South Carolina business contracts attorney answers that question for us.

What Are the Basic Elements Required in an Enforceable Contract in South Carolina?

Contracts are customized for various needs. However, contract law requires that a contract has certain basic elements for the contract to be enforceable in court. The basic elements of a contract are:

  • Two or more parties who are clearly identified within the contract;
  • An offer to provide goods, services, or other items of value;
  • Acceptance of the offer; and
  • Consideration to be paid for the goods, services, or other items of value. 

Simply put, a contract is a promise between parties to do something. The remaining terms of the contract describe the terms and conditions of the agreement. The parties to the contract must be competent to enter a contract. Minors and others who lack mental competency cannot enter valid, legally enforceable contracts. A contract that is too vague may also be difficult or impossible to enforce. 

Can a Verbal Agreement be Enforced in South Carolina?

South Carolina laws recognize oral agreements in some cases. However, some contracts must be in writing to be enforceable, such as an agreement to sell/purchase real estate, an agreement to pay another person’s debt, and a contract that takes longer than one year to complete. 

Even though the state might recognize and enforce an oral contract, that does not mean that it is a wise idea to do business with a handshake. It can be much more difficult to enforce a verbal agreement because there may be no evidence to prove that you had an agreement with the other party. If there were no witnesses to the agreement, you have nothing in writing to prove that you entered the agreement, and nothing of value has been exchanged between you and the other party, it is difficult to prove that the other party entered any agreement with you.

For that reason, it is typically best to put an agreement in writing whenever possible. Even a simple agreement can help ensure that you have legal remedies available if the other party defaults on the terms of the agreement or otherwise breaches the contract. 

Filing a Lawsuit For Breach of Contract

Having a written agreement can help you seek damages in the event of a breach including:

  • Compensatory damages 
  • Incidental and consequential damages
  • Liquidated damages
  • Specific performance
  • Contract recession
  • Reformation of the contract
  • Attorneys’ fees and costs

You can also obtain compensation for breach of contract for a verbal agreement if you prove that the contract existed, and the other party breached the contract.

Made a Verbal Agreement? Contact a South Carolina Business Contracts Attorney Today

If you have questions about drafting or executing a contract, contact our South Carolina business contracts attorneys to discuss the matter. Our business attorneys can help you determine if you have a valid contract and explain your legal options for breach of contract.

Five Ways to Build Your Business Through Government Contracting

If you never considered bidding for government contracts, you need to revise your thinking about government contracting. Government contracting is another source of business opportunities for your company. As you grow and expand your business, you need to take advantage of every opportunity in the marketplace to gain new customers. This includes working with a contracts lawyer when the need arises.

The government is the world’s largest purchaser of goods and services. Therefore, you do not want to miss out on the opportunity to share in the billions of dollars awarded each year in government contracts. In addition, if you are a small business, you may have an advantage because some government contracts favor small businesses.

Five Tips for Growing Your Business With Government Contracting

1. Consider Being a Subcontractor
If you are a really small business, like a one or two-person company, you may want to consider subcontracting. Many government contracts require primary contractors to use small businesses for a portion of the work. By working with larger primary contractors, you can more about your industry and government contracting.

2. Make Sure to Fulfill All Requirements of the Contract
Dealing with a government agency can be more complicated than dealing with a regular customer. Government agencies have many more rules that you must follow. It is not as simple as providing goods and services. You must often submit invoices in a specific way and by a specific deadline to obtain payment. Make sure that you understand the requirements within the contract and fulfill each requirement. Failing to fulfill contracts hurts your chances of obtaining government contracts in the future.

3. Consider Contractor Teaming Agreements
Working with another contractor is a great way to qualify for large government contracts. You can work with a contractor that has a different skill set so that you can qualify for contracts that have numerous phases and requirements. You can also create relationships with contractors that could help you grow your business in the future.

4. Take Advantage of Special Programs
Some government contracts are only open to certain businesses. For example, service-disabled veteran-owned businesses, minority-owned businesses, small business owners, and women-owned businesses may qualify for jobs that are not open to the general public. You may need to take extra steps to register your business or obtain your business certification, but the chance to bid on contracts that are not open to the general public is worth the time and effort to qualify for these opportunities.

5. Attend Government Events for Contractors
You need to make attending government events hosted by various agencies a priority when you are growing your business with government contracting. In most cases, the events are hosted by the private sector, but attract many industry experts and government procurement agents. You can check several websites for upcoming events. Try GovWin, GovEvents, or GovMark for more information about events that might interest you. Networking is an important element of growing your business with governing contracts, just as networking is important to growing a business through regular commerce.

Ask for Help with Government Contracts

You can access help and resources by working with Procurement Center Representatives with the Small Business Administration. In addition to information, you can also receive training and counseling to help you grow your business with government contracting.

For more assistance with government contracting, schedule a consult with a member of our team at Willcox, Buyck & Williams, P.A. today.