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Why Is a Force Majeure Clause Important in a Commercial Lease?

Posted on in Real Estate

South Side of Chicago Real Estate LawyerWhen you enter into any kind of lawful business contract with another party, the terms of the agreement are binding, and you may face legal and financial consequences for failing to uphold them. This is certainly true for a commercial lease, in which the tenant has a responsibility to make regular rent payments to the commercial real estate property owner, as well as to utilize and maintain the space in accordance with the lease terms. However, sometimes unexpected circumstances make it difficult for tenants to fulfill their commitments. Since 2020, the economic impact of the COVID-19 pandemic and the effects of looting in many American cities have posed a serious threat to businesses, with owners often finding themselves unable to keep up with rent. In these cases, a force majeure clause in the original contract can be a saving grace.

What Is a Force Majeure Clause?

A force majeure clause protects the parties to a contract from being found in breach of contract due to events that could not be anticipated or controlled. Force majeure clauses often address acts of nature, like floods, tornadoes, and other natural disasters, in addition to acts of people, like riots, wars, and strikes. The involved parties may elect to be specific regarding the kinds of events addressed in the clause or include a more general catch-all statement. A force majeure clause can also stipulate what each party will be expected to do if a force majeure event does occur.

Invoking Force Majeure to Obtain Relief in Illinois

According to a 2020 Illinois Force Majeure Law Compendium, the party seeking relief, which is often the tenant in the case of a commercial lease, bears the burden of proof to show that unanticipated or uncontrollable events were the direct cause of their inability to fulfill the rent obligation or otherwise uphold the terms of the contract. The compendium states that courts may be more likely to accept a force majeure argument if the type of event causing the difficulty is specifically mentioned in the contract clause. An experienced attorney can help you build and present your case to give you the best chance of achieving a favorable outcome.

Contact a Beverly Commercial Real Estate Attorney

At The Marques Eason Law Group, we can help you draft a commercial lease or another real estate contract that includes a force majeure clause to protect you in the future. If you are still struggling in the wake of the COVID-19 pandemic, we can help you seek relief from breach of contract with a defense strategy based on a pre-existing force majeure clause, or possibly the common law theory of impossibility of performance if there is no force majeure clause in your contract. Contact an experienced Chicago commercial real estate lawyer today at The Marques Eason Law Group so we can review your case and help you explore your legal options.

 

Sources:

https://ppp.worldbank.org/public-private-partnership/ppp-overview/practical-tools/checklists-and-risk-matrices/force-majeure-checklist

https://www.uslaw.org/files/Compendiums2020/COVID19_ForceMajeure_2020/Illinois_USLAW_Compendium_COVID19_Force_Majeure_2020.pdf

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