Contractual issues during a pandemic

The current coronavirus pandemic has caused local and national disruptions that will have a short and long term effect. These disruptions have affected our schools, jobs, and businesses. Some of us might be wondering how a contract we signed might be affected by this pandemic. Parties to a contract can attempt to negotiate around these disruptions. But what if the parties cannot come to an agreement? What follows is a description of some legal doctrines that could be implicated in such contractual scenarios.

Force Majeure

A standard clause found in contracts is the force majeure/impossibility clause (hereinafter “force majeure”). Force majeure is when an extreme event beyond the control of the obligor arises and prevents the impacted party from performing the contract. An example of this is when a natural disaster prevents an obligor from delivering goods or services. If the natural disaster prevents the obligor from performing, then the obligor can be excused from performing because of the force majeure event.

Things to consider in a matter that involves force majeure

  1. “Is the extreme event listed in the force majeure clause?”;
    1. If the event is not listed, then the obligor is not excused from performance and will be in breach of the contract if he does not perform even if a non-listed event does occur.
  2. “Which party is bearing most of the principal non-payment obligations?” (whoever is that party is the primary beneficiary of a force majeure clause);
    1. In a sale of goods transaction, the seller bears the principal non-payments obligations and therefore, would want a broad force majeure clause.
  3. “Do the parties have the ability to terminate the contract if a force majeure event continues for a certain length of time?”
  4. “Does the dispute resolution clause (if there is one) apply to the force majeure clause, or does it go straight to the court?”
    1. Research shows that force majeure-related events are typically arbitrated.
  5. “Is the force majeure event covered or excluded by the parties’ insurance policy?”
  6. “What duty does the obligor have to the other party(ies) if a force majeure event occurs? Does he have to mitigate? Notify the obligee(s)?”

List of Force Majeure Events:

  1. Natural disasters (floods, earthquakes, severe weather)
  2. Pandemics, epidemics, quarantines
  3. Violence such as war, terror attacks, civil unrest
  4. Government action (eminent domain, condemnation, changes in laws/regulations, a government’s authority failure to act on a timely basis)
  5. Organized labor activities, strikes
    1. Have to look at if the obligor caused the strike (lockout of employees or bad faith bargaining)
  6. Shortages of power, supplies, transportation, and infrastructure
    1. Have to look at if the obligor caused the shortage or could have planned ahead.

List of Force Majeure Events that are excluded

  1. Changes in economic circumstances
  2. Subcontractor defaults
  3. Equipment failure
  4. Banking system failure

How have Wisconsin Courts interpreted and applied Force Majeure clauses

A Plaintiff argued that a lease continued in effect beyond a date under its force majeure clause.[1] The Plaintiff alleged that the combination of private and governmental inaction constituted a force majeure event.[2] The contract in Goldstein stated that the duration of the lease would be extended for a period equal to the period of force majeure event.[3] The court in Goldstein held that because it is presumed that parties to a contract know what laws and regulations will affect the ability to get a permit; thus, the failure to obtain the permit is not deemed a force majeure event. The court, in this case, also noted that only one party had the right to invoke the force majeure clause, and that was not the Plaintiff.

What if the contract/agreement does not have a “Force Majeure” clause?

Doctrine of Impossibility or Impracticality

If a contract contains no force majeure clause, then the doctrine of impossibility or impracticality might be invoked. These two doctrines excuse the obligor from performing under a contract if the performance is excessively burdensome due to an unforeseeable event that is not within the obligor’s control. 

Although there is not a lot of Wisconsin law precedent regarding the doctrine of impossibility or impracticality, there is Wis. Jury Instruction(JI)—Civil 3062. Which provides that:

“If performance of a contract is possible only if a certain state of facts continues to exist, then a cessation or termination of the state of facts which makes performance impossible will excuse failure to perform. But if performance becomes impossible by reason of contingencies which should have been foreseen by a party, then such party is not excused from the duty to perform.”

            A court would look at the facts and determine if the case satisfies the excessively burdensome standard. The Covid-19 pandemic is a unique circumstance that might allow a party to invoke one of these doctrines. A court would first have to look at a number of factors, some of which are considered in force majeure, to determine if one of the doctrines excuses nonperformance.

Frustration of Purpose Doctrine

 Frustration of purpose doctrine applies to contracts for goods and services. It is different from the doctrine of impossibility/impracticality because it can be invoked in cases where an event fundamentally changes the purpose of the contract. If the principal purpose of the contract is frustrated, at no fault of a contracting party, then the doctrine may apply to excuse nonperformance.  There is a high bar to meet when invoking this doctrine because the frustrating event must have been a primary purpose of entering into the contract. Furthermore, the event at issue must not have been within the risks contemplated by the contract.

            Wisconsin courts have held that to render a contract unenforceable because of a frustration of purpose, it requires that (1) the party’s principal purposes in making the contract is frustrated; (2) without that party’s fault; (3) by the occurrence of an event, the non-occurrence of which was a basic assumption on which the contract was made.[4] The court in In re Estate of Shepard determined a contract was enforceable because a flight instructor could no longer teach a student, due to the student’s death. [5]


Conclusion

Rizzo & Diersen S.C. is here to help you or your business navigate these legal issues. Contact our office at 262-652-5050 with any questions you may have regarding the coronavirus pandemic disruptions.


[1] Goldstein v. Lindner, 2002 WI App 122, ¶ 20

[2] Id. at ¶ 29.

[3] Id. at ¶ 30.

[4] In re Estate of Sheppard, 2010 WI App 105 at ¶ 13.

[5] Id. at ¶ 15.

Right to Remain Silent

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The 5th Amendment was ratified by Congress in 1791. It is part of the Bill of Rights, the first ten amendments to the United States Constitution. The 5th Amendment provides several protections, but one of the most commonly invoked protections is the right to remain silent. This right originally only applied to proceedings in federal court but not state court. This is a crucial distinction, as most criminal defendants are tried in state courts. This changed after the Civil War as part of a trend in which the Bill of Rights was systematically applied to all of the states by the United States Supreme Court. In 1961, the Supreme Court decided in Miranda v. Arizona that the right to remain silent applied not just in the courtroom, but also to any situation where individual freedom of action is curtailed, such as police interrogation.

Defendants Usually Do Not Testify

The 5th Amendment right to remain silent has thus grown dramatically from its humble beginnings in 1791. Indeed, popular depictions of the 5th Amendment Right are numerous. They might involve a defendant in a criminal case refusing to take the stand at trial, or a suspect in police custody refusing to answer questions without the presence of a lawyer. Although often dramatized, these situations are very common. In criminal cases, defendants usually do not testify. This is sometimes because the defendant would need to tell the truth on the stand about what happened and thus give evidence against himself. In other situations, a defendant may avoid the stand so their testimony cannot be misconstrued to say something different than what they meant. Before a criminal trial, the defendant’s attorney will help him to understand the benefits and the risks of taking the stand.

You Can Decline To Talk To The Police

But does the right to remain silent apply to someone who is not on trial? What if the police ask you questions about someone else who is suspected of having committed a crime? Often, people believe that they have to answer questions asked by the police. However, this is not the case. It is acceptable for you to decline to answer any questions asked by the police, even if you have been subpoenaed as a witness in a criminal case. Furthermore, refusing to answer questions may be a wise decision, especially if your answers could be interpreted more than one way. If you are in doubt about whether you should answer questions asked by the police, you should politely decline and then consult with an attorney. This is a better alternative to making an incriminating admission. If you do answer questions, always be truthful.

Corporations And Business Entities Do Not Have The Right To Remain silent

When does the Fifth Amendment not apply? The Fifth cannot be pled by corporations or business entities. It is available only to an individual person. Also, the Fifth cannot preclude a third party, such as your employer, from producing documents to incriminate you.

Contact Us

If you are in doubt as to whether to exercise your right to remain silent, you should seek legal advice as soon as possible.

Contact our lawyers today.

Crime Classification: Where To Draw the Line?

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As popularity never fades, there is a perpetual supply of crime related shows, but what makes a crime, a crime? Wisconsin State Legislature defines crime as “conduct which is prohibited by state law and is punishable by fine or imprisonment (or both).” (Statute 939.12) Most people know that criminal actions are sorted into categories based on their severity. These categories include infractions, misdemeanors, and felonies. Infractions are considered the mildest of the three, and felonies classify the most serious crimes committed. Depending on the severity or classification of the crime, the court procedures and minimum sentence guidelines are different. Each case also has its own ‘flavor’, meaning they are examined on a case-by-case basis.

In the state of Wisconsin, there are only two of the classifications mentioned above, misdemeanors and felonies. “A crime punishable by imprisonment in the Wisconsin state prisons is a felony. Every other crime is a misdemeanor.” (Wisconsin State Legislature 939.60) This is the difference between being ‘jailed’ (being incarcerated for no more than 365 days) and being sent to a state prison where incarceration lasts for a year or more. I will still give a little information about infractions.

Infractions

An infraction is the “violation of an administrative regulation, an ordinance, a municipal code, and in some jurisdictions, a state or local traffic rule.” (FindLaw 2018) Apart from previously mentioned minor traffic violations, here are a few more common examples of infractions:

  • Fishing without a license
  • Building permit violations
  • Drinking in public
  • Walking an unleashed dog

The infraction process begins when a citation is issued to a person by law enforcement. The ticket determines the case number, includes a description of the action and the state law or city code the action violates, the name of the issuer, the location of the courthouse, the deadlines for paying the fine or for an appearance in court, and lastly, instructions on how to pay the forfeiture. (FindLaw 2018)

Misdemeanors

A misdemeanor covers a very broad area of criminal activity and is a step below a felony. Misdemeanors usually include a fine and/or jail time less than a full year in a local or county jail (as opposed to a longer sentence in a state prison). In Wisconsin, misdemeanors are separated into classifications of A, B and C (A being more serious violations), and each has their own penalties as follows:

  • A Class A misdemeanor includes penalties of a fine that should not exceed $10,000, imprisonment longer than 9 months, or both. An example of a Class A misdemeanor is the theft of property worth no more than $2,500.
  • Class B misdemeanors include a fine that should not exceed $1,000 or imprisonment of 90 days or both. A situation that may be classified as a Class B misdemeanor would be disorderly conduct.
  • A Class C misdemeanor includes a fine that should not be greater than $500, an imprisonment that should not exceed 30 days or both. An example is a second conviction within 30 months for being a minor in possession of alcohol.

While a misdemeanor still isn’t a felony, these offenses are considered “crimes of moral turpitude”, which reflects a lack of knowledge of basic right and wrong, as well as a lack of a moral code of self-conduct. This depravity can negatively affect an individual’s ability to apply for scholarships and their ability to apply for and procure a job.

Felonies

There is a fine line regarding the ethical standards of people convicted of a misdemeanor versus those convicted of a felony. As mentioned before, being sent to jail for misdemeanor calls for no more than 365 days of incarceration. An individual is sent to prison when they have been convicted of a felony and will serve time greater than a year. There are 9 classifications of felonies, A through I. Similar to misdemeanors, classification A is made up of more serious crimes, and in this case, the most heinous.

  • Class A felonies are punishable by life in prison. An example is a first-degree murder, which is carrying out a premeditated homicide.
  • Class B felonies demand a sentence of imprisonment for no more than 60 years. An example of a Class B felony is first-degree sexual assault, which ranges from rape of an incapacitated person to engage in the medical treatment of another for self-pleasure.
  • Class C and Class D felonies both include a fine not to exceed $100,000.  A Class C felony must not exceed imprisonment of 40 years, while a Class D felony must not exceed 25. Both imprisonment and the forfeiture may be included. An example is child enticement, which is luring a child for self-pleasure.
  • Class E felonies call for prison time not to exceed 15 years, or a fine not to exceed $50,000, or both. An example of a Class E felony is aggravated battery, which causes significant bodily harm to another.
  • Class F and Class G felonies include a fine not to exceed $25,000. Class F imprisonment may not exceed 12 years and 6 months, and Class G may not exceed 10 years. An individual may be penalized with both imprisonment and a fine. An example is pimping, which is in most cases, a man that uses an organized ring of prostitutes for a share of the earnings.
  • Class H and Class I felonies are monetarily penalized up to $10,000. A Class H felony prison time may not exceed 6 years, and a Class I felony may not exceed 3 years and 6 months. Both penalties of imprisonment and the forfeitures may be used in sentencing. An example is the theft of property worth $5,000 to $10,000.

The air just got a little heavier, but crime, especially committing a felony, is a serious matter. TV doesn’t show you the penalties that can be placed upon a person apart from ones included in Class A and Class B felonies (mostly because ‘milder’ crimes wouldn’t make good television). These same, crime-glamourizing spectacles fail to show the reality and long term repercussions on all parties involved. Misdemeanors and felonies are the kinds of situations that can ruin someone’s life, and not just the person being convicted. Survivors of violent crimes have to live with that life-altering trauma, and families of victims must go on without their mother, father, sister, brother, and so forth.

Moral of the story, think before you act, and keep both your future and others’ in mind. 

Contact our criminal attorneys today.

Country Thunder Traffic/Drug/Criminal Charges

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Violations Near Country Thunder

Wisconsin law enforcement is actively involved in preventing the possession and delivery of marijuana and other drugs, underage drinking, and traffic offenses that occur at or near the County Thunder music festival. Unfortunately, many people who attend Country Thunder are cited and arrested for relatively minor offenses and face the possibility of a criminal record. The police may tell you it is only a ticket, but the consequences can be very serious. Rizzo & Diersen, S.C. has experience defending against exactly these kinds of charges.

Our Attorneys Make Court Appearances For You

Country Thunder is hosted annually in Twin Lakes, Wisconsin. In 2019, Country Thunder runs from August 16-18. If you were arrested or cited while at or near Country Thunder, contact Rizzo & Diersen, S.C. We handle every type of charge, including misdemeanor offenses, felony offenses, and traffic violationsIn many cases, our attorneys can even make the court appearances for you so that you do not have to travel.

Contact our attorneys today.

Alpine Valley Drug/Criminal Charges

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Wisconsin law enforcement is actively involved in preventing drug possession and delivery, underage drinking and other offenses that may occur at Alpine Valley. Unfortunately, many people who attend concerts at Alpine Valley are arrested for relatively minor offenses and face the possibility of a criminal record. They may tell you it is only a ticket, but it is VERY SERIOUS.

If you were arrested while at Alpine Valley, contact Rizzo & Diersen, S.C. We handle misdemeanor offenses, felony offenses, and traffic violations.

Contact our criminal attorneys today.