President Trump signed into law at the very end of 2020 another COVID-19 stimulus bill. Much of the writing about it has focused on the $600 direct payments to to individuals whose income falls below a certain thresholds. but this bill also contains important subsidies and changes for small businesses, including a new and significant second round of direct payments to small businesses payments under the Paycheck Protection Program (loans later forgiven).
Finney Law Firm attorney Rebecca L. Simpson will follow up on her blockbuster Spring performances on the initial PPP with information on the new stimulus programs, and be joined by Seth Morgan of the MLA Companies, a financial service and advisory group on Wednesday, January 13th from 6:00 to 7:15 PM via live webinar.
For assistance with the PPP or more information, contact Rebecca L. Simpson (513-797-2856). Also contact her if there is anything more we can do to help your small business.
Tonight, a second historic COVID relief bill passed both Houses of Congress and awaits signature by President Trump.
The bill provides significant supplemental relief for small business in addition to direct payments to individuals. Here are some highlights of the bill’s business provisions:
Paycheck Protection Program funds distributed under the first relief bill this spring and summer already by law were not to be counted as income, but the IRS had ruled that businesses could not count their expenditure as deductions, which essentially reversed the “tax free” nature of the forgivable loans. Under this bill, for all businesses who received the PPP this spring or summer, Congress has clarified that the expenses are deductible, which results in a benefit of another 30% or more from the previously-granted funds for businesses that are profitable.
A second round of PPP funding will be handed out, but this time it is limited to businesses with documentable and demonstrable downturn of 30% or more as a result of the COVID pandemic. Other tight conditions will apply. Thus, the pool of eligible borrowers (grantees) is far more limited than under the first PPP program. Amounts of the loans (grants) are not yet available.
In a significant give and take for landlords, Congress extended the eviction moratorium until the end of January, but they added $25 billion in assistance to tenants in arrears on their rent, allowing landlords to make application for the funds. It is expected that the Biden administration will extend the moratorium further after he takes office January 20 of next year. The applications are allowed for tenants who meet eligibility requirements, including (i) earning less than 80% of median income, (ii) at least one person in their households has lost a job and (iii) are at risk of losing housing.
Making meals and drinks for business entertainment of clients and customers 100% deductible.
The bill is 5,593 pages in length, meaning there remains a lot of dissection of its intricacies. Attorney Rebecca L. Simpson of the Finney Law Firm will be leading another EmpowerU webinar in early January covering how businesses and individuals can fully take advantage of the deductions and subsidies the bill provides. We will announce that webinar shortly.
More on the bill is detailed here in today’s Wall Street Journal.
Advancing our objective of “Making a Difference” for our clients, Finney Law Firm has made a point of briefing the various COVID relief and legal developments for our clients throughout 2020, and that will continue on this blog into 2021. Stay tuned for updates.
Unless you’ve been living under a rock somewhere, chances are the current COIVD-19 pandemic has affected at least one, and likely multiple facets of your life. But how do these circumstances impact contractual obligations made pre-COVID-19? Can the pandemic or the economic turmoil it is has created serve as a justification or excuse for getting out of a contract? For instance, if you contracted to purchase real estate in February, before all of the furloughs and Stay at Home Orders, do you still have an obligation to close on that purchase? While the case law surrounding this question is likely to dramatically expand in light of recent events, the answer could likely be “no” under Ohio law, at least as it stands today.
Four Corners Rule
As an initial proposition, contracts are governed by the “four corners rule,” meaning they will be interpreted consistent with what appears on the face of the document. Chan v. Miami Univ., 73 Ohio St. 3d 52, 57 (1995) (“[A]n instrument must be considered and construed as a whole, taking it by the four corners as it were.”). Where unambiguous, no additional terms will be read into the contract, and the terms that are contained within the document will be given their ordinary meaning. Fidelity & Casualty Co. v. Hartzell Bros. Co., 109 Ohio St. 566, 569 (1924) (“This court cannot make a new contract for the parties where they themselves have employed express and unambiguous terms. In the construction of contracts the language employed must be given its usual and ordinary meaning.”).
Parties to a contract are, thus, bound by the contract’s plain and unambiguous terms and are obligated to do that which they have promised in the contract, subject to certain narrow exceptions…
Force Majeure
Contracts often contain “force majeure” clauses. Roughly translated, force majeure is Latin for “superior forces.” Often, you will see this interpreted or referred to as an “Act of God.” What this means in a practical sense is that there is some sort of unforeseeable, intervening circumstance that justifies non-performance under the contract. For example, you have a contract to rent an apartment unit (a lease) but, right before you move in, a bolt of lightening strikes the apartment building and it burns to the ground. Depending on the language of the force majeure clause, this would likely be a qualifying unforeseeable circumstance that could nullify the lease.
Relative to real estate transactions, force majeure clauses are perhaps more often seen in the commercial context than the residential. Many standard realtor’s contracts do not contain such clauses. These clauses may also appear in certain consumer transactions – think contracts for goods or services to be performed.
Consistent with the four corners rule, courts cannot “read in” a force majeure clause where one does not appear on the face of the contract. Therefore, if your contract does not contain a force majeure clause, you likely cannot claim it as a reason for terminating the contract or skirting your obligations thereunder. SeeWells Fargo Bank, N.A. v. Oaks, 2011 Ohio Misc. LEXIS 4812, at *7 (Franklin C.P. June 24, 2011) (rejecting force majeure argument where the contract did not contain a force majeure clause).
Where a contract does contain a force majeure clause, courts are likely to interpret such clauses in a very narrow fashion. Thus, if the clause does not specifically contemplate disease, pandemic, unexpected unemployment, or business closures, it may not provide relief in the specific COVID-19 context.
What about changing financial circumstances or “impossibility” of complying with your obligations, more generally?
Despite the non-existence of an applicable force majeure clause, one might think that his or her general inability to pay that which they promised under the contract or worsening financial conditions might excuse performance under the contract. While this may seem like a logical conclusion at first glance, the law dictates that “[m]istaken assumptions about future events or worsening economic conditions, however, do not qualify as a force majeure.” Stand Energy Corp. v. Cinergy Servs., 144 Ohio App. 3d 410, 416 (1st Dist. 2001); see also Wells Fargo, at *7-8 (“[E]conomic down-turn is a risk that every business person necessarily undertakes when they enter into a contract . . .That this country incidentally suffered an economic downturn during the term of their contract does not discharge them from their contractual obligations.”). “A party cannot be excused from performance merely because performance may prove difficult, burdensome, or economically disadvantageous.” State ex rel. Jewett v. Sayre (1914), 91 Ohio St. 85, 109 N.E. 636, 12 Ohio L. Rep. 291.
This body of case law generally speaks to “objective” versus “subjective” impossibility. While the law might sanction non-performance based on objective impossibility (i.e., no one could reasonably fulfill their obligations under the circumstances), it typically does not excuse performance based on subjective impossibility (i.e., a particular party cannot fulfill their obligations under the circumstances).
Can challenges posed by COVID-19, independent of financial concerns, create a justification for non-performance?
In the real estate context, for instance, what about the health risks posed by out-of-state buyers or sellers traveling for closings? Fortunately, we live in an era that offers a wealth of technological options here. For example, many title companies are offering “remote” closings. If this is a concern for you, consider reaching out to Ivy Pointe Title for your closing needs, as they offer a staff of experienced title professionals, e-notary licensure in both Ohio and Kentucky, and remote closings, which allow parties to close on real estate transactions from the comfort and safety of their own homes where necessary.
We can help…
All this being said, parties to a transaction can often jointly agree to terminate or delay performance if they so choose, though a subsequent writing may be required to effectuate this agreement in a manner that will be enforceable and protect both sides down the road. If you are party to a transaction and the other side has threatened non-performance where there has been no agreement to terminate or delay, these are likely some of the arguments you will see. On the other hand, if you are concerned about your ability to perform under a contract, there may be additional language within the “four corners” of your contract that could provide some relief. Contracts are exceedingly unique from one another, such that there really is no “one size fits all” approach.
Finney Law Firm has a team of legal professionals with experience ranging from real estate to employment to general commercial law, and we would be happy to review your contract and provide feedback as to your options or help with drafting amendments thereto. Please feel free to reach out to me at (513) 943-5673 or [email protected] to set up a remote consultation.
Additionally, our attorneys have authored a number of blog entries relative to the COVID-19 crisis and hosted webinars as to potential relief for employers, small businesses, and 1099 employees that may also be of interest. And for more on commercial or real estate transactions and “force majeure,” click here.
We hope you are all staying safe and healthy during this unprecedented time.
Over the weekend, I spoke with about a dozen 1099 or business-owner clients who (a) either still did not know about the Paycheck Protection Program or (b) did not intend to apply for various reasons. Some discussion of that.
If you don’t know about the program, educate yourself. It is broad and generous. It encompasses almost every sole proprietor, 1099 contractor and business owner in the nation. Read about it generally here and watch this webinar for employers with W-2 employees and this webinar aimed primarily at sole proprietors and 1099 contractors.
Do I have to suffer closure or severe economic damage under the COVID-19 crisis to be eligible? No. This program makes virtually no distinction between those severely impacted and those still operating “normally.” You do need to certify some impact from the COVID-19 crisis.
Isn’t this just another SBA loan program with lots of paperwork and loan fees? No, not at all. (a) First, it is a “forgivable loan.” (b) The primary condition is that you must continue to employ your employees for 8 weeks (or call them back if you already laid them off) after the loan is made. (c) If you meet that and a few other simple conditions, the “loan” becomes a grant. (d) It is east to apply. (e) There are no fees. (f) There is no loan guarantee. (g) Even creditworthiness is not considered. This program is designed quickly to get cash into the hands of businesspersons so they can maintain their payroll and avoid bankruptcy.
How do I apply? Call your bank. If you need more help, contact Rebecca L. Simpson of our office (513.797.2856). Candidly, it is fairly easy and straightforward.
But I read the program already is out of money? Yes, this is true, but it appears likely that Congress is poised to authorize another $300 billion this week. Our view is the program will be fully funded until every eligible business which applies has been funded.
Does the program apply to churches and other non-profits? The program does have special rules for churches, but it generally applies to all 501-C3s and C-19s (veterans organizations).
I don’t need the money; let someone else in need have the funds. This is certainly a justification for not applying, just so you have thought this through for yourself and your business. When this program is gone, we see it as highly unlikely it will be renewed on such generous terms.
Every businessperson has their hands full right now, navigating the shoals of uncertainty and change the COVID crisis has presented, but this program almost certainly is well worth your time and attention.
This morning, Finney Law Firm attorney Rebecca L. Simpson appeared live with anchor Angenette Levy on Local 12 to discuss the latest developments with the Paycheck Protection Program.
Attorney Rebecca L. Simpson has been our point person inside Finney Law Firm to research and keep updated on the PPP and to advise clients on the intricacies of how to access Paycheck Protection Program funds for their small businesses each step of the way. She has already led three webinars on the topic, with two more to come this week.
Contact Rebecca L. Simpson (513-797-2856) for assistance with the program.
As our clients have noted from six years and a half years of our work to “Make a Difference,” Finney Law Firm is actively working to assure that our attorneys are constantly up to date on developments in the law, and then impart that information to clients and the public with blog entries, e-newsletters, seminars, webinars and media appearances.
Our performance during the COVID-19 crisis has met and exceeded that standard. And, because our clients hunger for information to help them to weather this unprecedented storm, the response has been overwhelming.
Here is our performance by the numbers since the beginning of March:
28 COVID-related blog entries with critical legal updates for clients, including information on the PPP and EIDL programs from the SBA.
Those blog entries have had more than 6,300 “reads” since the crisis began.
6 major Constant Contact e-mail blasts with important COVID-19 legal developments.
More than 13,250 “opens” of those emailed newsletters, a record number in one month. We are seeing that the information is so valuable that there are a record number of “forwards” from clients to their contacts with our information, and those “forwards” are opening and reading the communications as well.
We have had 8 major TV and radio appearances relating to COVID-19 issues.
We have gotten calls from all over the nation for help on the PPP program from the SBA.
We have done or will do 4 webinars on the PPP program. Between the webinar live attendees and those watching the recordings, we will have reached more than 1,000 participants.
We have retained exclusive relationships with 1 Ohio e-notary and 1 Kentucky e-notary to become one of the first title companies to be able to do entirely electronic, remote closings over the internet through Ivy Pointe Title.
All of this is designed to assure we are as effective as we can be in serving you, by understanding the law, which is developing daily, by developing the contacts to achieve your objectives, and by imparting that knowledge in a usable format so you can implement to win on legal and economic battlefields that are daily emerging.
I congratulate and thank our team — lawyers, paralegals and staff — for contributing to this area of service to our clients. And thank our clients — existing and new — for recognizing this sophisticated and cutting-edge approach to the practice of law for their benefit.
Let me know personally how the Finney Law Firm can help you to weather this storm. My email is [email protected] and my phone numbers are 513.943.6655 (o) and 513.720.2996 (c).
Thursday, April 2 (tomorrow) at 7 PM Finney Law Firm attorneys Christopher P. Finney and Rebecca L. Simpson will host a free webinar on the sweeping CARES Act, and in particular the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL), as well as forthcoming stimulus checks and changes to the unemployment compensation system. Additionally, on the call will be:
Employment attorney Stephen E. Imm of Finney Law Firm who can answer questions of employers and employees relating to workplace legal issues.
Melissa Knies, Commercial Banking Relationship Manager in the Commercial Banking Department of US Bank, who can answer questions from the banker’s perspective on these programs.
These programs, along with the stimulus checks and unemployment benefits, provide significant assistance in this time of health and economic crisis for the nation.
If you have questions you want answered on the program, please feel free to share them in advance here, and we will try to be prepared to answer those.
Additionally, our prior email had a link to an SBA list with only a few qualifying banks. In fact, far more banks are making these loans. The broader and updated list is here.
With the advent of the COVID-19 Crisis, Finney Law Firm and Ivy Pointe Title have quickly stepped to the plate, with technology that allows for the practice of law with appropriate social distancing, with attorneys who focus on practice areas to help their clients, and with cutting edge information on emerging programs to help businesses and individuals in need.
Technology allowing for electronic interaction
Finney Law Firm and Ivy Pointe Title have carefully developed the tools to be prepared for a day such as this:
DocuSign allows for execution of documents from your computer. By federal and state law, e-signed documents are fully enforceable as with “inked” documents. Our team is licensed and trained in DocuSign technology for all documents in which clients will allow an electronic signature.
Electronic notary. Finney Law Firm and Ivy Pointe Title contracted with one of only a handful of licensed e-notaries in Ohio for exclusive provision of e-notary services. Using the platform DocVerify, we have the strongest technology to allow real estate closings and other transactions to proceed. By Ohio law, it is permissible to have documents signed and acknowledged (notarized) without person-to-person interaction via electronic signature and electronic notary.
Electronic payments. We use e-billing and credit card payments (and wire transfers and EFTs) for clients who prefer this method of billing and payment.
Electronic discovery and electronic depositions. Your litigation does not need to stop because of the COVID-19 crisis. Most of the work pre-trial can still move forward using e-mail, Zoom.US or Microsoft Teams for depositions, and motion work that can be electronically filed with almost all Courts.
Work-from-Home. If you do need to visit our offices, you will find that most of our professionals are not at their desks. Rather, they are safely (for you and them) working from home with the latest technology including Microsoft Surface laptops, Microsoft Teams Video Conferencing, Microsoft Office 365 data in the cloud, so we can access your data from anywhere in the planet, but with tremendous Microsoft security technology and backups.
Practice areas to help your business
Our business lawyers are up to date and prepared to help you through the thicket of issues that arise or are heightened with the COVID-19 crisis:
Attorney Isaac T. Heintzis proficient in contract interpretation, including how to enforce or avoid obligations under a lease or other agreement. He has already written purchase agreements with COVID-19 contingencies to extend due diligence periods to the declared end of the crisis. As you might expect, Isaac has also had many clients initiate their estate planning, or finish long-delayed estate planning work.
Attorney Stephen E. Imm heads our employment law group, and is advising clients on a myriad of new COVID-19 legislation and addressing employment law claims under previously existing law and the new enactments.
Attorney Bradley M. Gibson heads our litigation group which is dealing with a multitude of business-to-business disputes, including those arising because of the COVID-19 crisis.
Attorney Richard P. Turner runs Ivy Pointe Title and in that capacity has been using every tool at our disposal to continue to close your transactions “accurately and on time, every time.” These include closings respecting social distancing, and we stand prepared to be one of the first agencies in Ohio to implement fully electronic closings. We also can do drive-by closings where you come to our office and sign documents from your car, or we come to you and you can sign them on our car hood.
Attorney Christopher P. Finney heads our public interest practice, and the host of issues addressing government-to-business and government-to-individual interaction arising from the COVID-19 crisis.
CARES Act assistance for your small business
Congress just passed the CoronaVirus Aid, Relief and Economic Security Act, which includes the Paycheck Protection Program that will provide what essentially are grants to businesses with fewer than 500 employees and enhanced Economic Injury Disaster Loans(EIDL).
We are working furiously to meet the needs of our clients in this fast-emerging crisis. Let us know how we can help you or your small business navigate these turbulent waters to come to the other side safely and profitably.
And our hope is that each of you remain healthy throughout this pandemic.
