March 23, 2020
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Taylor Porter attorney Jess Frey was interviewed in a Baton Rouge Business Report article, "Attorneys Face Onslaught of Questions Regarding Force Majeure, Business Interruption Insurance."
Due to the Coronavirus pandemic, attorneys are getting bombarded with client inquiries about force majeure and business interruption insurance, and they caution that the highly desired sources of relief are far more complex than many realize, and some businesses might not be able to claim either, depending on their contracts.
Force majeure, typically a boilerplate provision included in commercial lease agreements, applies to an unforeseen or unavoidable event that prevents a party, like a tenant, from being able to uphold a contract or obligation, like a lease. Though often glossed over, this so-called “act of God” provision is becoming especially critical at a time when tenants are telling their landlords they won’t be able to pay rent due to the viral outbreak. But whether landlords will recognize the disruption as an act of God remains to be seen. Because there is no universal standard definition, clauses can vary among contracts. Further complicating matters is that most provisions aren’t entirely clear, and they don’t typically list pandemics as excusable force majeure events.
Frey says he’s monitoring a pending case in New Orleans regarding a bar that closed because of the pandemic, which is trying to claim business interruption insurance by citing damages. “The outcome of that case could determine how much litigation we’re going to see,” Frey says, “but when stock prices go down at the rate they’re going, litigation generally goes up.”
Frey recently authored an article on "Force Majeure Provisions in Light of Recent Events."
Frey practices in the areas of contracts, corporate transactions, business, real estate and finance, focusing on business and finance transactions ranging from acquisitions, divestitures and mergers to general contract matters, formation for large and small companies and governance. He represents individuals, start-ups, small businesses and public companies (including master limited partnerships) in various industries, including chemical plants, construction companies, real estate investors and developers, management companies, oil and gas companies, waste management companies, doctors and insurance companies, assisting with their growth, planning and day-to-day operations. Jess’ practice includes representing both banking or lending institutions and borrowers in financing transactions; private placements of equity and debt; drafting and negotiating contracts, such as service agreements, supply agreements, Purchase Order terms and conditions, construction contracts, purchase agreements, acts of sale, leases, servitude agreements, loan documents, mortgages, employment agreements, operating agreements, joint venture agreements, management agreements and pipeline contracts.