Common law in the event of a pandemic: the Spanish flu of 1918

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Jordan wajs

While it may seem unprecedented, COVID-19 is not the first global pandemic to disrupt modern society as we know it. The Spanish flu pandemic from 1918 to 1920 infected around a third of the world’s population and significantly disrupted the day-to-day functioning of individuals and businesses.

In response, courts in common law jurisdictions around the world have been called upon to consider how the pandemic is expected to affect the rights and obligations of parties. In the years to come, it is very likely that these same courts will face a similar challenge. The evolution of the common law in response to COVID-19 may be influenced by its development under similar circumstances a century ago. In this regard, several otherwise non-exceptional historic decisions may take on new and immediate significance. Here are some of those decisions:

Contract frustration caused by a pandemic

A pandemic can make it difficult, if not impossible, for a party to fulfill its contractual obligations. In Cunningham vs. Insinger, [1924] RCS 8, a Supreme Court of Canada decision, the respondent asserted that he was unable to develop a mine in part because of the effect of the Spanish flu on the available workforce. Interestingly, however, the gist of the Respondent’s position rested on its unique interpretation of the contract, rather than on the doctrine of frustration.

What may have motivated the respondent’s curious decision is the fact that during the negotiations, the respondent had expressly mentioned the possible impact of the Spanish flu on the development work. This would, indeed, almost certainly have negated the possibility of successfully making the breach of contract argument. According to Cowie v. Great Blue Heron Charity Casino 2011 ONSC 6357 at paras 21-22, in order to successfully invoke the doctrine, a party must establish, among other things, that a unexpected intermediate event made it impossible to perform the contract. Although nearly a century has passed, this principle remains relevant in the wake of COVID-19: parties must determine whether they foresee the possible impact of a pandemic on the performance of a contract before considering that the contract was frustrated.

Force majeure clauses

Alternatively, a pandemic can trigger a force majeure clause of a contract, delaying the performance of an obligation or completely discharging part of an obligation. In a 1920 California Court of Appeal decision, Citrus Soap Co. v. Peet Bros. Mfg. Co. (1920) 50 Cal. App. 246, 194 P. 715, the quarantine protocols put in place by the California legislature in response to the Spanish flu interrupted the manufacturing processes of a soap maker and delayed the delivery of its soap to a customer after the deadline. The customer sued the soap maker for breach of contract.

However, the parties’ contract contained a “possibility of delay in performance” clause (similar to a force majeure clause) which read as follows:

“This contract is subject to … any intervention in the installation by reason of which the buyers or sellers are prevented from producing, delivering or receiving the goods and, in this case, the delivery thus suspended must be carried out after these disabilities have been removed; otherwise, to be done in good faith.

The court ruled in favor of the soap maker, finding that the clause allowed the soap maker to deliver the rest of the soap within a reasonable time after the original deadline.

Although force majeure clauses are common in trade agreements today, they do not necessarily guarantee that a party is protected from the effects of COVID-19. Indeed, each clause is interpreted on a case-by-case basis, and all the clauses are not as oddly broad as that of the soap maker contract. Most parties’ trade agreements do not exempt the parties from all interference in their processes. On the contrary, it is much more common for a contract to specifically identify certain intermediate events (war, riots, natural disasters, illnesses, etc.) which fall within the scope of the force majeure clause. As a result, while the effect of COVID-19 on contemporary businesses may be far greater than the Spanish flu was on businesses at the turn of the 20th century, some future litigants may not get relief from the happy soap maker.

Mitigation of damages after breach of contract

Finally, in the probable event that COVID-19 results in breaches of contract, non-breached parties will be held accountable to mitigate their damages. In another decision from 1920, AG Creelman Co. v. Canada Cement Co., [1920] AJ n ° 38, a non-faulty part was judged not to have sufficiently mitigated the damage during the devastation of the Spanish flu.

Certain behaviors of the non-faulty party can certainly be criticized today: in particular, after his supplier broke the contract by supplying defective cement, he did not ask the supplier to provide replacement cement (which the supplier could have done immediately). On the other hand, part of the behavior of the party not at fault was attributable to the Spanish flu, from which its director and several of its employees suffered. The court was not sympathetic to the non-at-fault party in this regard, believing that the non-at-fault party should have done more to mitigate the damage despite the pandemic.

The duty to mitigate – still an important part of the law a century later – requires a non-violating party to conduct itself “reasonably” while minimizing its harm. If, however, damage mitigation exposed employees to illness, public policy concerns might dictate that such mitigation efforts should not be considered “reasonable” conduct, and certainly should not. be encouraged. Without the benefit of hindsight, it is difficult to determine what is and is not reasonable to do during any given stage of a pandemic. Ideally, courts will take this into account when assessing whether parties have met their obligation to mitigate during the COVID-19 crisis and will not consider conscious risk aversion to be unreasonable.

Conclusion

While much has changed since the Spanish flu pandemic, the common law that evolved in response to it remains relevant today. These cases, and those that have been decided in other historic crises (such as world wars and natural disasters), offer insight into the issues that will be debated in the near future and may themselves serve as an important precedent to mention. and to distinguish in response to COVID-19[FEMININE[FEMININE

Jordan Wajs is a Toronto-based litigator at Owens Wright LLP, with particular emphasis on commercial and corporate property litigation. You can reach him at [email protected] or 416-848-4732.

Photo credit / Denis_prof ISTOCKPHOTO.COM

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