Park Law
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Force Majeure: contract and
lease terms in times of crisis Heather M. Eichenbaum, executive committee member with Spector Gadon Rosen Vinci P.C., explores this complex issue during an exceptionally difficult time
L
eases, concession agreements, ride purchase contracts, revenue share agreements: all are too often either full of legalese or woefully insufficient single-page
documents. Either they are so convoluted that they are near- impossible to understand and enforce or they are so lacking in significant terms as to be virtually useless in the event of a dispute between parties. At times like these, when we find ourselves traversing a worldwide pandemic that is wreaking havoc on all aspects of our industry, many are finding that their contracts are not offering them the protection they expected at the time they were signed. It is strongly recommended that legal counsel prepare, or at least review, all written agreements before they are signed to ensure you are protected under unexpected circumstances. However, if you are not going to engage counsel for this purpose, you must at least make sure that all terms of the contract are clear before it is agreed upon and signed. For example, an effective ride purchase contract covers
all of the terms of the agreement between the parties. These include, but are certainly not limited to, the timing for performance by both parties (i.e., delivery of a ride and the exact schedule of payments for that ride), the specifications for the ride (including to what standard(s) it must be designed and manufactured), whether or not the purchase price includes commissioning, or ensuring the ride is permitted for use in the buyer’s venue), warranties, insurance requirements, and exceptions for performance of the contract. It is this last category of terms that is frequently overlooked
or vague. Contract performance is often excused by “Acts of God” – but what are “Acts of God”? “Force majeure” is a common term in contracts that can justify noncompliance with the contract terms, but many have no idea what it means. Similarly, compliance with a contract may be excused during “wartime” or in the event of “casualty” to the premises. Politicians have frequently likened the Covid-
19 pandemic to “war” – so are you now excused from performance of your contractual obligations? With stay-at- home orders in vast portions of the world where our industry operates, does this constitute a “casualty” because you are denied access to your business premises? The long and short is that contract terms, whether in a
lease, ride purchase agreement, or concession revenue share agreement, are only as good as the definitions attributed to them. Even where a term or phrase has a common meaning in one legal system, that common meaning may well vary from country to country or even from state to state within a single country. These discrepancies can be exacerbated when the contract is international and the parties have different native languages. It is, therefore, extremely important – particularly in international (and even interstate) business dealings – that the parties ensure their contract terms are mutually understood and agreed upon. All terms that are not entirely self-explanatory across the native languages of both parties should be defined in the contract before it is signed by either party. Doing so does not ensure that both parties will be satisfied with the outcome of a dispute between them; but at least both parties will know what they are agreeing to and should not be heard to complain later than there was a misunderstanding regarding the contract terms.
DEFINITION: FORCE MAJEURE
Force majeure – meaning “superior force” is a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, epidemic or an event described by the legal term act of God (hurricane, flood, earthquake, volcanic eruption, etc.), prevents one or both parties from fulfilling their obligations under the contract. In practice, most force majeure clauses do not excuse a party’s non-performance entirely, but only suspend it for the duration of the force majeure.
Heather M. Eichenbaum is an executive committee member with Spector Gadon Rosen Vinci P.C., practicing in Pennsylvania, New Jersey, and New York. She concentrates her practice in the representation of amusement, sports, hospitality, and recreation venues. Legal counsel to, and a Board Member of, NAARSO, she is also a member of the NJAA, IAAPA, OABA, and IISF. For legal assistance regarding contracts or leases, you can reach her at: +1 215-241-8856, or heichenbaum@
sgrvlaw.com.
22 APRIL/MAY 2020
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