Avoid Unintended Consequences When Reopening Businesses

On May 13, 2020, the Wisconsin Supreme Court struck down the state-wide “Safer at Home” order. Many local municipalities and counties have since issued their own orders restricting activities as a result of the COVID-19 pandemic. Similar situations are playing out across the country as some states move to relax restrictions on businesses, and a patchwork of rules and ordinances can have businesses in neighboring communities facing vastly different restrictions on their ability to operate.

All of this can leave clients wondering – what can I do with my business now? Further, if I choose to open my business in violation of state or local ordinances, what consequences might I face?

While the immediate concern may be a visit from the police, fines or other enforcement actions, businesses need to also take a close look at the fine print of their agreements with their insurers, landlords and lenders. Many insurance policies, contracts and loan agreements contain provisions requiring a party to comply with all statutes, laws, rules, orders, regulations and orders applicable to them. Operating a business in violation of legal restrictions on business activity could have the unintended consequence of putting a business in default under a contract or loan agreement, or negating insurance coverage.

These are difficult and confusing times for businesses. Carefully review your various obligations under contractual agreements to avoid surprises. If you have any questions regarding your ability to operate your business, or restrictions on business activities during the COVID-19 pandemic, contact your FOS attorney.

Be well.