Coronavirus and How it Affects your Contracts!

As the number of Coronavirus (COVID-19) cases in the United States and Internationally continues to rise, many business owners are feeling the effects of quarantines, social distancing, travel bans, and more. In the short amount of time since the virus has emerged, businesses, especially in the hospitality and service industries, have experienced significant and devastating disruption.

What is a Force Majeure Clause?

A Force Majeure clause is a provision in a contract that allows for a party to suspend or terminate the performance of its obligations when certain circumstances beyond their control arise, making performance inadvisable, commercially impracticable, illegal, or impossible.

Examples of Force Majeure events include war, riots, fire, flood, hurricane, typhoon, earthquake, lightning, explosion, strikes, lockouts, slowdowns, prolonged shortage of energy supplies, and acts of state or governmental action prohibiting or impeding any party from performing its respective obligations.

Force majeure clauses must be clearly stated in the Contract and are interpreted strictly.

Is Coronavirus a Force Majeure Event?

The severe disruption to businesses around the world, resulting from the effects of Coronavirus (both physical and emotional), are clearly affecting business owner’s ability to function in the declining economy.  In approaching business operations and all the contracts that accompany the same, you may be wondering “can I get a break” and the Force Majeure clause may be the way to get just that. While unfortunately Coronavirus is not likely to be specifically stated in your clause, as it is a world event unanticipated in our lifetime, it can most certainly be argued that, depending on the business sector, the response to the Coronavirus (such as mandatory lockdowns, social distancing, and business closures) are in fact acts of government which are impeding a party from performing its respective obligations. It may not fully excuse non-performance or cancel existing contracts, but in some cases may defer or alter the terms.

What Does this Mean for Me?

For these reasons it is vital that business owners carefully review the language of their agreements, and not simply choose not to perform and expect to escape without consequences.  In entering this uncharted territory of business operations in a consumer panicked society, it is important the business leaders in the industry stay calm and solution oriented by doing the following:

Detailed Review – Review every contract you have that requires some form of fulfillment of goods or services, or some sort of financial action or commitment over the next 6 months.

Be Proactive – Reach out to your business contacts regarding the impact of the Coronavirus. It is likely that they too have felt the effects and discussing how to mitigation potential damages is valuable to all parties.

Modify your Clause – Whilst the world hopes that we never see another pandemic as tragic as Coronavirus, this should be a wakeup call for all contract participants to ensure that the Force Majeure clause is included in every contract and shall include the extreme scenarios.

Retain Legal Assistance – If you, your business, your real estate, or your pending construction is at risk, contact Gulati Law to discuss your options. As a firm with vast experience dealing with contract delays, performance challenges, payment concerns and force majeure clauses we have the skills to assist you through this difficult time and preserve your current relationships. Most importantly stay safe!

Broward County’s New Recording Procedures

journalsBroward County, Florida, has released a recent update on their new record keeping procedures. Effective January 1, 2015, Broward County will no longer assign Book and Page numbers to the documents being recorded. The new record keeping procedures will be done through an “Instrument Number” which is how the documents will be found if searched in their database. They do make an exception for large format documents. See Broward County’s Memo for further information.

Source: RTT Instrument Number Memo

Maintaining Accurate Records


Regardless of the size of a company, whether a small business or a large one, it should comply with its state law record-keeping requirements.

Here is a list of some of the important corporate documents to maintain:

– A copy of the corporation’s articles of incorporation or organization;

– Corporate bylaws or operating agreement;

– Organizational minutes;

– Annual reports;

-Minutes from any shareholder meetings;

-Maintain an updated list of all executives, employees, etc;

-Accurate accounting records; and

-Important Financial statements.


For a year-end business check-up, contact your Business Law Attorney today!

Going Into Business with a Partner – A Must Read!

So you have decided to join forces with someone who shares your vision and passion to start a new venture.  Before coming up with a business plan, marketing strategies, and services offered, it is important to lay some groundwork and draw up a Florida Partnership Agreement, Florida Bylaws, or a Florida Operating Agreement depending on the type of business entity you form.  Although it is not legally necessary to have such a document, the Partnership Agreement along with other preliminary steps discussed in this article will potentially irradiate issues or conflicts arising from poor planning.


This first thing to discuss with your partner is the tasks and roles that each of you will be responsible for.  How well do your abilities complement each other?  If one is better at keeping track of finances and records, the other may take over sales and marketing.  Get to know each other’s strengths and weaknesses, past experience, and expertise.  Make sure you both feel comfortable expressing your needs and expectations for your business from the very beginning.  Ask questions about values, goals, and motivations to make sure you are on the same page before moving forward.  You might want to try working together on a smaller project or plan a trip to focus on understanding your chemistry and how you deal with certain situations on a small scale.

Once you feel confident to move forward, the absolute next step is the written agreement.  Your document should include the roles and responsibilities of the partners, exit clauses, compensation, investments, and ownership, among others, depending on the terms.  Use this as an opportunity to outline the business terms and establish weekly, monthly, and yearly routines for partners, managers, and staff.  Defining each detail about your business and the documents, contracts, and licenses will protect you from headaches and other legal issues if any conflicts were to arise. See what Gulati Law can do for you and your business partner today!

Source: Wall Street Journal – Small Business- Starting a Business 

A Few Things to Consider When Applying for Small Business Loan

For developing entrepreneurs, one of the most pertinent obstacles encountered when starting a small business is obtaining the funds. Money is always a major concern for those who desire to be successful throughout the ups and downs of business.  When applying for a business loan, there are a few things to consider:

Fitting the Criteria

Depending on which bank you are using to apply for a loan, there are several staple criterion they may consider.  Here are a few things they may look for when reviewing your application for a small business loan:

  1. The purpose behind it.  For a loan guaranteed by the Small Business Administration (“SBA”), this could include how you will use the loan proceeds, the size of the business, and the type of business dealings you will be associated with.  Unsound business practices such as lending, pyramid sales, and gambling will not qualify for a loan in almost all cases.
  2. How able you are to pay back the loan.  Banks strongly prefer that the loan be fully secured, however this may not be a make-or-break factor.  Providing strong collateral through personal and business assets as well as holding personal investments in the business may prove your capacity to return on investment.
  3. Character and experience.  Providing a favorable and stable credit history both personally and within your business may reflect a responsible and accountable attitude.

Providing the Proper Information

There are going to be a least a few necessary documents when going in for a loan.  Although this may vary depending on the bank, obtain these basic documents to be the most prepared:

  1. A clear and detailed business plan.  This may include personal information such as past education, employment, experience, and all other information relevant to your business.
  2. A credit history of all present and previous businesses as well as personal history of all partners.
  3. Financial statements (past, present, and projected). Includes both personal and those of owned and shared businesses.
  4. Projections of income for 1 to up to 5 years.
  5. Personal guarantee of all business owners.
  6. All legal documents pertaining to your business (copies of contracts with third parties, franchise agreements, commercial leases). Gulati Law can help you through this process. 

Begin the Process Wisely

Before going into the bank and asking for a loan, there are a few basic steps to take to educate you on how to go about the process.  This means doing your research.

  1. Choosing which lending institution benefits you the most.  The smaller the business (especially in start-up phase), the less likely a large bank will grant your loan request.  Small businesses tend to be less profitable for them, yet require the same amount of servicing and underwriting.
  2. Speak with other small business owners that you trust.  Chances are many people starting out with their own businesses have gone through the same steps you are now preparing for.  Getting honest advice could prepare you for any unexpected obstacles and lead you in the right direction.
  3. Approach your current lending institution or ones you have worked with in the past.  They may be more willing to work with you one on one and provide helpful tips and information.
  4. Look into local community banks and credit unions.  These smaller lending institutions frequently get overlooked and may offer a better option for your business.
  5. Speak with your legal counsel, they may be able to connect you with resources you were unaware of.

If you have any questions or concerns regarding your start-up business or obtaining a business loan, contact us today we would be happy to help.

Source: Small Business Administration


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