Vol. 12, #18.1 – March 27th, 2020– ALLAN GOLD’S BLOG
Coronavirus (COVID-19) PANDEMIC 
By Allan Gold, lawyer, lecturer and author.
CORONA VIRUS (COVID-19) PANDEMIC- #1
A. OPENING
Today’s Little Pep Talk. Greetings. I hope you’re doing alright. We all need to keep everything in perspective. It’s bad, but it could be worse. For no fault of our own, we’re all in effect, sidelined and sitting on the bench. But the good news is that this self-confinement shall eventually expire and then, we’ll be permitted to get back into the business game. And when we do, the pent-up demand, which everyone is speaking about, shall be our reward. So for now, we must all try to hold onto that thought and in the interim, stay as positive as possible.
Quotes of the week. Here are a few wise statements to consider today:
- Mahatma Gandhi: “It is health that is real wealth and not pieces of gold or silver’. It is one mission and we are one team!”
- Frank Sonnenberg: “Be sure you don’t spend so much time making money that you forget that someday all you will wish you could buy is more time.”
What’s an Epidemic, etc.? For those who regularly read this blog, they know that I’m methodical and start at the beginning. You’ve heard and keep hearing repeatedly the words, “epidemic,” “outbreak” “cluster” and “pandemic.” I know that you know what they roughly mean. But to add to your comprehension and save some time for you, I looked them up. The definitions are as follows, “Epidemic refers to an increase, often sudden, in the number of cases of a disease above what is normally expected in that population in that area. Outbreak carries the same definition of epidemic, but is often used for a more limited geographic area. Cluster refers to an aggregation of cases grouped in place and time that are suspected to be greater than the number expected, even though the expected number may not be known. Pandemic refers to an epidemic that has spread over several countries or continents, usually affecting a large number of people. (Source: https://www.cdc.gov/csels/dsepd/ss1978/lesson1/section11.html)
B. Small Business Law: It’s for the family business owners in dealing with (and trying to survive) this catastrophic commercial upheaval.
Canada like the rest of the world is at present in the throes of the Corona virus (Covid-19) Pandemic. The daily lives of our people and all economic activity has been interrupted in an extraordinary way that has not been seen before in our lifetime. Our governments at every level have issued directives to the population and orders to stop normal business activity, save and except, more or less, for that of the health network, grocery stores and pharmacies and enterprises providing food-to-go, goods/services being essential and/or in short supply, etc. Of course, your family business has been impacted; and being a good corporate citizen, it has curtailed operations in consequence of the foregoing.
This said, you ask, “Now what?” That’s where this blog comes in. I know that the founder-owner of an independent business was courageous at the outset, believing in self, having a single- minded purpose in launching the enterprise. Unafraid of getting hands dirty, always hard-working, he/she did strive each time to do a good job and satisfy customers. The company then grew and grew. He/she solved problems no matter what! Being a doer, it’s tough at present, to sit on our respective butts. Of course, this is not our choice. We’re told not to go to the work place. For many of us, this means that we can’t work and earn income. But it’s a matter of life and death for us, our families, our neighbours and our countrymen. And so, we must do our part. I want your enterprise to come out flying at the other side. But you need some relevant information. So let’s get started.
B.1 “Contract” If in business, you have made one or more contracts before you launched- as for example, you may have made a lease of commercial premises and/or bought furniture & equipment, supplies & stock in trade. And since then, you have repeatedly made contracts when purchasing materials, inventory, etc. You also routinely make contracts when you’re selling to customers. I know that you intuitively know what a contract is, but let me tell you how it is defined in the Civil Code of Quebec – the definition is as follows. “1378. A contract is an agreement of wills by which one or several persons obligate themselves to one or several other persons to perform a prestation. Contracts may be divided into contracts of adhesion and contracts by mutual agreement, synallagmatic and unilateral contracts, onerous and gratuitous contracts, commutative and aleatory contracts, and contracts of instantaneous performance or of successive performance; they may also be consumer contracts.1991, c. 64, a. 1378.”
That surely is quite a mouthful. But for me, it basically boils down to the situation where the party acquiring wants to obtain something and is willing to do something to get it like making a payment (unto the party giving), adhering to certain terms and conditions, all in consideration therefore. And thence, being so obliged, the party acquiring must carry through and perform his/her obligations towards the party giving. In the normal course, this is generally no big deal and we do just that every day. But what happens here and now? How can a party do what he/she has promised whilst being unable to open the door and work and earn revenue?
B.2 “Act of God” & “Cas fortuit/Force majeure.” Well the law may have something for that. It’s an exemption from liability. It recognizes certain happenings as an “Act of God.” It embodies the notion of “Cas fortuit” & “Force majeure.”
B.2.1“Act of God” In my review, I’ll start with the phrase of “Act of God,” which is defined by The Free Dictionary as, “An event that directly and exclusively results from the occurrence of natural causes that could not have been prevented by the exercise of foresight or caution; an inevitable accident.” It adds that “Courts have recognized various events as acts of God—tornadoes, earthquakes, death, extraordinarily high tides, violent winds, and floods. Many insurance policies for property damage exclude from their protection damage caused by acts of God.” (Source: https://legal-dictionary.thefreedictionary.com/act+of+God)
B.2.2 “Cas fortuit/Force majeure” Next, I will refer you to the pertinent article of the Civil Code of Quebec, notably Art. 1470, which reads as follows.
« DIVISION II
CERTAIN CASES OF EXEMPTION FROM LIABILITY
1470. A person may free himself from his liability for injury caused to another by proving that the injury results from superior force, unless he has undertaken to make reparation for it.
Superior force is an unforeseeable and irresistible event, including external causes with the same characteristics. 1991, c. 64, a. 1470; I.N. 2014-05-01 ».
B.2.2.1 Case Law. While I gave you the statutory provision, I will now provide you an excerpt from the case of Boulanger c. Hamelin [1997] RL 171, wherein the Hon. Mr. Justice Robert Legris JCS wrote,
« [11] Le cas fortuit est un «événement extérieur à l’homme que celui ci ne pouvait prévoir, auquel il ne pouvait résister et qui a rendu absolument impossible l’exécution de l’obligation»[1] . Et encore: «Le caractère d’extériorité est exigé par la jurisprudence et la doctrine en général pour éliminer les cas où l’inexécution, tout en provenant d’un événement normalement imprévisible, a sa source dans le champ normal d’activité propre du débiteur. En effet, dans de nombreux cas, l’événement d’apparence fortuite qui se manifeste dans les limites de la zone d’activité du débiteur constitue, dans le cas d’une obligation de résultat surtout, une faute. (…)»[2]
[12] Sur ce même caractère d’extériorité, Nadeau et Nadeau, Traité pratique de la
responsabilité civile délictuelle[3], disent: «Ce pourra être “soit un accident de la nature, soit le fait d’une personne ou d’une chose dont on n’a pas à répondre”.»[4]1997 CanLII 17111 (QC CS)
[13] Il s’agit donc nécessairement d’événements ne dépendant nullement de la
volonté de ceux à qui ils arrivent; il faut l’intervention d’une cause extérieure, étrangère à la personne du débiteur. »
B.2.2.2 Commentary. Now, let’s dissect this. I’ll paraphrase. There must be a ‘superior’ force, such beyond that of Mr. Everyman, who couldn’t predict precisely when it would happen and couldn’t avoid it. Indeed, it must have been outside of his control. In order to be exempt of liability, there is a very high threshold to meet. It must be an exterior event that isn’t foreseeable for which resistance isn’t possible; and it must be absolutely impossible to fulfill the legal obligation. The element of being exterior to the will of man (such as nature) is critical in order to lift it from the realm of fault.
In my humble opinion, it’s crucial for business people to be aware of the defence of “cas fortuit” and “force majeure.” While all cases are different and each must be analyzed individually, chances are better than even that this defence may have application in the current situation. But KNOW that this is not a blank check, indeed a “get out of jail free” card for everyone. You must always act in good faith; and it’s essential that you do your best and mitigate the loss for yourself and the other parties.
C. CONCLUSION
It’s tough. We’re solid citizens. We’ve been self-reliant. And we’re responsible for other people, who are counting on us. We need to keep a roof over their heads and put food on the table. We feel helpless. Furthermore, at the office, we all have accounts payable. We pride ourselves on paying our bills and this, on or before the due dates; and we expect others to pay us promptly in return. But we’re all stuck. Take it easy. We will get through this. I know it.
Finally, to end this piece with a smirk, I recall someone once telling me, “That’s none of your business.” But now if someone said that to you and me, we can reply (and really mean it), “No, it is my business!”
Best wishes to each of you and to your entire family.*
Allan Gold
P.S. Next time, I will make an announcement about the “Montreal Small Biz ‘Coron-Aid’ Project*” /«Projet “Coron-Aide ” Aux Petites et Moyennes Entreprises (PME) de Montréal*»
D. PREVIEW OF NEXT IN THE BUSINESS LAW BLOG SERIES.
I believe that with this blog series, I may have started you along the way to being more aware of law. I will continue on with the subject of commerce during the Corona virus (Covid-19) Pandemic, such aimed towards Independent business, “Petites et Moyennes Entreprises,” PME, Family business – more precisely where to look for money in these very trying times. Interested? Want to get more information about the current topic, or other areas of law written by an “avocat,” one of the family business law lawyers, family business lawyers Montreal, practicing also in the elder law field? See you next time. It won’t take too much time. Remember my byline – it’s “Gold’s Legal Minute*GLM*!” And please don’t forget to join my professional community by entering your e-mail at the prompt.*
E. NOTICE – CAUTION –DISCLAIMER.
The material provided herein is of a general nature, strictly for informational purposes. The interpretation and analysis is not to be misapplied to a personal situation with a particular set of facts. Under no circumstances, are the herein suggestions and tips, intended to bring a reader to the point of acting or not acting, but instead, the hope is that they are to be a cause for pause and reflection. It is specifically declared that this content is not to be a replacement of, or a substitution for, legal or any other appropriate advice. To the contrary, for more information on these presents, related subjects or any other questions, it is the express recommendation of the author that everyone seek out and consult a qualified professional or competent adviser.
*©/TM 2020, 2019, 2015-2018, Allan Gold, Practitioners’ Press Inc. – ALL RIGHTS RESERVED
** ©/TM 2006, 2008, 2018 Allan Gold, Practitioners’ Press Inc. – ALL RIGHTS RESERVED