Review Your Contracts to Protect Your Business from Litigation

August 2021

As pandemic restrictions abate, businesses that spent much of the last year in survival mode are starting to look ahead again. At the same time, real estate and construction industries, among others, are seeing a rise in litigation for a variety of reasons. Articles over the next couple of months will address steps that businesses can take to protect themselves in a litigation-heavy climate. 

Businesses can better protect themselves from litigation by reviewing and evaluating their contracts to make sure they make sense in the context of existing and anticipated projects and current practices. Do the contracts spell out a clear path forward when the unexpected happens? Have practices and policies changed such that existing contracts no longer fit the nature of the project? Contracts that no longer accurately describe a business’s practices may cause a party to be in breach of contract from day one. Taking time to review the language now will reduce the risk that the court will be brought in to decide what the contract terms mean.

Contracts may also need to be revised to adapt to a post-pandemic industry. Commercial lease tenants are trying to determine how much space they need and what it will look like in terms of employee and client demands, remote access and hybrid capabilities, and health and safety requirements. The lease’s permitted use language or the zoning restrictions in the particular location may not reflect the parties’ agreement. Similarly, flexible subleasing options may provide solutions to changes in demand, but the lease may need to be updated to accurately describe the changes. 

While the pandemic may not be over, the industry has changed from what it was before the pandemic. Parties must adjust to volatility and unknowns in the short and long term, reassessing risk tolerance and controlling variables through contract terms. On the other hand, parties may desire the flexibility to respond to sudden changes in demand and safety. With volatility comes the pressure to move fast to lock in rates and terms before they change again. Even when moving at this faster pace, taking the time for due diligence and analyzing how the terms apply in context will save time in the long run if parties can avoid litigation.

Finally, as cases arising out of the pandemic make their way to the courts, we may see clarifications or changes to certain issues like the scope of force majeure provisions that will impact how the industry responds going forward. There is a continued need to monitor, learn, and adapt as these issues develop.

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Business & Real Estate Law

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