Force Majeure Clauses: Is Anything Really Boilerplate Anymore?

If you’ve ever seen or attempted to read a business contract, you know how long these documents can be. You might even be annoyed by all the “boilerplate” clauses thrown into the contract. Let’s face it, the parties really only care about the meat of the agreement; who’s doing or providing what under the agreement, and for how much.

One popular boilerplate clause is the “force majeure” clause. If you don’t already know, the force majeure clause is often found near the very end of the contract. Yes, keep flipping … keep going… yes, there it is!

This clause is meant to protect the contracting parties when they find themselves unable to perform their contractual obligations due to “acts of God” – sounds ominous doesn’t it? Well these extraordinary events, contemplated by this clause, are just that! Hurricanes, war, terrorist attacks, volcanic eruptions, a zombie apocalypse (hey, it could happen!), and epidemics… Now you see where we’re going with this?

COVID-19 has really put these clauses into play as of late. Business owners are pulling out their active contracts and looking to see whether this little clause can provide some relief with respect to all or some portion of their contractual obligations and limit their potential liability for damages.  

You’re probably wondering, does my current force majeure clause cover me in light of COVID-19? When relying on these clauses, you have to look at the clause in your contract carefully. For example, does the clause specifically reference situations such as a “pandemic” or “state of emergency”? Even if your contract doesn’t specifically reference this particular situation, you can still benefit from this clause if you can show that performance is impossible due to unforeseeable and extraordinary circumstances outside your control.

When we draft force majeure clauses for our clients, we ensure that the clause is drafted broadly to capture as many unforeseeable situations as possible. It didn’t take COVID-19 for our firm to give this clause the consideration it deserves. We’ve been protecting our client’s business interests from zombie apocalypses for years!   

Robin K. Mann, JD

Getting Businesses Through This Situation

Have you noticed all of the emails companies are sending out telling you what they are doing due to Covid-19?  I appreciate the ones from grocery stores that are letting me know how things are changing.   I do not appreciate the ones from online software services I use: you’re open.  You’re online.  We’re fine, we’ve never been within six light years of each other, let alone six feet, nor are we going to start now.

As a result, our firm hasn’t been bombarding our clients with updates on what we are doing internally to keep serving our clients.  Instead, we’ve been responding to clients inquiries about how to address staffing, occupational health & safety and cash flow issues.   We’ve also been continuing steps in litigation: yes, litigation continues, albeit virtually. 

The positives coming out of this so far are that:

  1. This is showing we are able to adapt as a society quickly to an online service situation in certain sectors that have been slow to adapt in the past, like the Courts;
  2. Our IT has done a great job preparing us for the emergency (thanks to Shawn Coffey at CpiNetworks.ca ) ;
  3. Government is listening to business concerns and making quick changes in response.

Nothing is perfect.  This situation is something no one anticipated, but we are going to get through it and everyday we are on lock down is one day closer to being free from it.

Overall, we encourage the following for businesses:

  1. Keep your cash flowing as normally as possible.  If you’re able to remain open and carry on business, then continue to pay your staff and suppliers as you normally would;
  • Talk to your landlord if you cannot pay your rent.  Silence is the worst thing you can do: discuss your situation and be open to solutions;
  • Use this time, if you’re in litigation, to get your paperwork together so we can move forward quickly when the Courts are fully open again.

Inga B. Andriessen, JD

You Better Show Up to Court (Or Else) [once They are open again]

I previously wrote a blog about successfully getting an Order to serve a Notice of Contempt Hearing by regular mail as the debtor was (with the assistance of his parents) evading service.

Our client spent a lot of money trying to get them served without success.

Well, not surprising anyone, the debtor did not show up for the Contempt Hearing and the file was traversed to the Superior Court for a warrant for their arrest to be issued.

How do we know that the warrant was issued?  Because the Court contacted us and advised that they were arrested at a traffic stop.

When civil warrants are issued by the Court, its tied to your driver’s license and when you get pulled over, it shows up on your record, and then you’re arrested.

It is a very rare occurrence that this happens.  If it was going to happen to anyone, it should have been this particular debtor.  As a representative of a party, there is nothing more frustrating than a debtor who thinks they can get away with failing to attend Court without repercussions.

Do you really want to be thrown into general population and when asked “what you in for?” and your response being: “I didn’t show up to Small Claims Court.” 

That’s a pretty lame excuse and you won’t get any ‘cred in the slammer.

So don’t be like our debtor.  When you’re served with a Notice to show up to Court, you better show up…or else.

Full disclosure: this Blog was written before the Covid-19 Shut Down of Our Courts. Small Claims Court has a special procedure for debtors with warrants for their arrest to reach out to avoid being arrested right now. Find out the information here: https://www.ontariocourts.ca/scj/suspension-small-claims-ops/

Murray Brown, Licensed Paralegal

Is Your Business Protected From Viruses?

There are so many things out there that can affect your company.  Even time change can affect your company (tired employees the next day).  Do you have what you need to protect your company?

Given the hype over the last month or so, we are talking about viruses, both human and computer.  I’ve mentioned before that we ensure our computer systems are highly protected given the information that we store as a law firm.  What about you?  Do you have a reputable anti-virus for your systems?  This is important especially if you get an employee who has contracted a human virus and will need to stay home for a while.  Having the capability of working from home is certainly great if the job can accommodate it.   

What about human viruses?  What can you do as an employer to attempt to keep those germs out of the office?  Well, there isn’t much that you can do, except supporting your employees when they are not feeling top notch.  Even the simple cold can make you feel run down and not very productive.  Employees would be more willing to stay at home and not spread those nasty germs if they knew their employer is understanding.  A good way to ensure that employees know the policy is having an Employee Handbook in place.  This is where you can set out what it is exactly that you expect from your employees.  The Handbook would also set out all Leaves that are available to employees in different circumstances which may arise. 

Given what is happening with COVID-19, everyone is on high alert and afraid of even a simple sneeze.  Are they overacting?  That’s not for me to decide but knowing the policy in our office, I know that “when I am sick, I WFH”, meaning if I’m under the weather, I can work from home, and I’m able to do that because we do have those policies in place.

While you are out there emptying the shelves of hand sanitizer, toilet paper and water, we are busy in the office ensuring companies have their policies in place.

Christine Allan, Law Clerk

Keeping Employees Safe and Keeping the Lights on in the Business

Covid19.  This is a powerful virus and I’m not just referring to the medical aspects of it.  Covid19 is crashing the stock market, highlighting poor government responses in some countries and excellent responses in others.

Businesses have been responding in different ways: some have encouraged employees to work from home.  Others have cancelled work travel and conferences with large groups of people. 

All of that works well if you’re in an industry where you can do that.  Of course, the fall out from the work from home movement may be that companies realize they don’t need to lease all of the office space they currently lease and commercial real estate rates may drop in the long term. 

If you’re a small business and/or a business that cannot have staff work from home such as a medical practice, retail store or restaurant, these are very difficult times.

In Ontario Employers have a duty to keep their employees safe.  This means the Employer must have a plan to deal with Covid19.  Simple steps include providing hand sanitizer to staff, setting out a policy of when it must be used as well as detailed cleaning policies.

In our firm we wipe down all surfaces in boardrooms immediately at the end of meetings.  All staff have hand sanitizers at their desk and our staff knows they have the right to physically remove themselves from people who are coughing, without having to offer an explanation.  But that’s not hard in a law firm.

In the restaurant business, for example, the Employer faces the difficult problem of spending more money to protect against Covid19 while possibly taking in less money as more people avoid public spaces. 

Keeping staff safe is important.  Having a business that is still there once this health issue is over is also important: important to staff and business owners alike.   Balancing the two can put businesses in a conflict and lead to complaints by employees to Tribunals and possibly the Court system. 

We’re here to help employers navigate these difficult times: don’t make uninformed decisions on what to do or not to do in your workplace as this will cost a lot more in the long run.

Inga B. Andriessen, JD

You Can Complain, But You Cannot (Usually) Hide at the HRTO

If you aren’t savvy with acronyms, the “HRTO” is the Human Rights Tribunal of Ontario. This Tribunal deals with claims of discrimination and harassment brought under the Ontario Human Rights Code. 

As business lawyers we have seen a dramatic increase in the number of HRTO Applications being filed against employers. In fact, there’s been a 25% rise in the number of applications being filed in the last few years, compared to 2016. 

While some Applications have merit and should be dealt with through the HRTO, we also come across Applications of disgruntled employees who file claims against their former employers out of spite.

For those that do choose to abuse this process, all we can say is – you can file your Application, but you can’t hide!

One thing to remember for those considering an HRTO Application is that your name and the relevant details to your Application become part of the public record. HRTO hearings are open to the public and written decisions, which include party names, are available to everyone.

Some parties bring an Application with the HRTO thinking that they can later conceal their personal information by way of a Tribunal Order. These Orders, which a party might seek to “anonymize” their name in the HRTO’s decision, are granted in extremely rare cases.

There are really only two circumstances in which initials will be used instead of names to anonymize the individuals mentioned in HRTO decisions: (1) protecting the identity of children and (2) exceptional circumstances.

Examples of “exceptional circumstances” include specific threats to personal safety, where there are parallel criminal proceedings relating to an alleged sexual assault, and where there is highly sensitive medical information.  

So if you are thinking about commencing an HRTO Application, make sure you’re doing it for the right reasons because this decision may follow you whether you like it or not!

Robin K. Mann, JD, Associate Lawyer

Employment Agreements Matter

It’s coldish, there is a lot of snow, (sometimes) the days are short and the nights are long.  That’s right, it’s February.  What better way to celebrate a mild month than to have a Teacher’s strike?  For those, like me,  with young children being affected by the strike, I sympathize and hope for a quick resolution. 

While our firm doesn’t handle unionized employees, we do help our clients with their new and existing employees, from the beginning of employment, to raises and termination. 

Bargaining is not something that only happens with unions, it also happens in non-unionized workplaces.  As mentioned above, giving significant raises to current employees and change in jobs description or duties could trigger the need for a new agreement to be signed between the employer and employee. 

The concept is the same as with a union.  The employer states what they are willing to offer as compensation, the employee counters and then you have a deal all without a third party, the union.

We can ensure that the agreements you are getting your new, or current, employees to sign does not contravene the Employment Standards Act and at the same time, protect the employer. 

If you just asked yourself why you need to get a current employee to sign a new agreement when making changes to their duties, or giving a raise, then you need to contact Inga B. Andriessen, our employment law guru!

Christine Allan, Law Clerk

Family Business

As we all look back fondly on the Family Day we just celebrated, or perhaps with a “see ya later suckers” attitude, it seemed like the right day to Blog about family businesses.

The mere mention of Family Business sets off the gentle ding ding of alarm bells in most Business Lawyers’ heads and often, not surprisingly combined with the “ding ding ding” sounds of a jackpot win.    Why is that?  Well, unfortunately, most Family Businesses have more problems than most, particularly in employment areas as well as succession planning.

Over 27 years of advising clients on Family Business matters I have the following pieces of advice to share:

  1. Do not force your adult children to work in the Family Business.
  2. Adult children, do not work in the Family Business out of guilt.
  3. If you employ your adult children, pay them an appropriate wage.
  4. If you employ your adult children, use an employment agreement, just like you would with a non-family employee.
  5. Do not micro manage your adult children employee.
  6. Have a proper succession plan for passing the Family Business to your adult children.

Failure to follow the above will likely lead to big legal bills, hashing out problems with the adult children and the other employees in the workplace who will mimic the discord in the relationship at the top.

Need some help?  Give us a shout!

Inga B. Andriessen, JD

Just Consent Already

It is very frustrating to deal with parties who act unreasonably in a matter.  That frustration gets taken up a notch (or forty) when the other party is self-represented, because they usually don’t know how the Court process works.

I am having a tonsillectomy mid-February and I am expected to be home for several weeks where I can’t work or speak (my partner will be thrilled!).

I asked an individual to consent to the adjournment of a hearing that was scheduled during my time off.  They said “no.” They think it was appropriate for my client to have to go and find someone else to be in my place.  They’re wrong.

My request for an adjournment came two months before the hearing and the request was more than reasonable.  When I advised them that I would bring a Motion to adjourn the hearing and I would be seeking costs against them, they appeared to be more than eager to attend the Motion to explain to the Deputy Judge why my surgery didn’t matter and why my client should find someone else to attend with them rather than adjourn the hearing.

Well, I attended the Motion and the other side didn’t attend!  They refused to consent, and they did not attend the Motion (see the frustration of dealing with self-represented parties?!). 

I obtained an Order for costs, and the Deputy Judge wrote in the order that the party was acting unreasonably, considering the circumstances of my requirement for an adjournment.

Failing to consent to a reasonable request, doesn’t make your case stronger, it makes you look unreasonable, and can in the long run, delay the proceedings.

When a party asks for an adjournment, and their request is reasonable, just consent already. 

Murray Brown, Licensed Paralegal

Death, Taxes & Secondary Wills

Even in death we often can’t escape the tax man. When we die, estate administration tax, or “probate fees,” become payable. These fees, which are approximately 1.5% of the value of a deceased’s estate, can add up.

However, some smart estate planning by your lawyer can limit and sometimes avoid the payment of probate fees.

Well let’s back up, and start with the basic’s: what’s probate?

Probate, also known in Ontario as a “Certificate of Appointment of Estate Trustee,” is a process where the court certifies a deceased’s will and the appointment of the deceased’s estate trustee. This process requires the payment of the estate administration tax mentioned above.

Since no one likes paying tax, whether alive or dead, you can take some comfort in knowing that probate isn’t always required. For example, if the deceased leaves real property that needs to be transferred or sold, that will require probate. The problem is if you have one asset that attracts probate, then your entire estate under your will dealing with that asset must be probated.      

Well guess what folks – as you may have already guessed from the title of this blog – you can have more than one will!

As probate fees increased over the last few decades in Ontario, some savvy estate lawyers started finding ways around too much taxation. Essentially you can use one will to deal with assets that require probate and the other for assets that don’t attract probate on their own. People also often use secondary wills to deal exclusively with their business assets.     

And that’s not all – I bet you didn’t know that wills probated by the court become a public document. So secondary wills, which don’t attract probate, provide greater privacy as well to the deceased, their beneficiaries, and their estate. 

While there really isn’t anything more certain than death and taxes, a little estate planning can’t hurt.   

Robin K. Mann, J.D., Associate Lawyer