WINE IN TIMES OF COVID-19 : WINE IN TIMES OF COVID-19 : HOW TO SURVIVE AND THRIVE HOW TO SURVIVE AND THRIVE By: Emily Harris Gant COVID-19 Requirements, Relief & Recommendations Washington Wine Institute & Washington Winegrowers Association Friday, April 10, 2020 SEATTLE PORTLAND WASHINGTON, D.C. NEW YORK SPOKANE BEIJING
This webinar contains educational information necessarily of a general nature and cannot be construed as legal advice.
How Does COVID-19 Impact My Contracts?
Termination • Termination for convenience • Termination for cause • Survival of terms? 4 foster.com
Force Majeure A party may terminate this contract if events or occurrences beyond the party’s control make it illegal or impossible for the party to perform its obligations hereunder (a “ Force Majeure Event ”). Force Majeure Events may include, but will not be limited to: acts of God; war; acts of terrorism in the city in which [Winery] or [Group] is located; governmental regulation, including a pandemic, epidemic or quarantine of the [Winery] or [Group’s] location by a national, provincial, state or local governmental authorities with jurisdiction; disaster; fire; strikes (other than those involving the employees of the party seeking the benefit of this section); civil disorder; or curtailment of transportation facilities which prohibit 25% or more of attendees from attending [Group’s] event, provided that, and for clarity, in each case, the listed event or occurrence makes it illegal or impossible for the applicable party to perform its obligations hereunder. 5 foster.com
Force Majeure, cont. • Terminate without liability? • Delay or excuse performance? • Very dependent upon the specific language in the FM clause • Clauses read narrowly 6 foster.com
Force Majeure, cont. Party seeking protections of FM must prove: • Event in question caused the inability to perform • Event in question is a “force majeure” event, under the specific language in the contract 7 foster.com
Extra-Contractual Defenses • Frustration of purpose • Impossibility or impracticability of performance 8 foster.com
“Handshake” Agreements Under the statute of frauds, certain contracts must be in writing to be enforceable: • To be performed in a period exceeding one year • Guarantees of the debts of another • Certain sale of goods over $500 • Sales of an interest in real estate 9 foster.com
Maximizing Insurance Recovery for COVID-19 Losses
Potential Coverage Lost income for business interruption • Sometimes called “business income with extra expense” or “time element” coverage • Often requires “direct physical loss or damage” to covered property 11 foster.com
Potential Coverage, cont. “Contingent” business interruption coverage • Covers BI losses resulting from physical loss or damage to your customers or suppliers 12 foster.com
Potential Coverage, cont. Civil Authority • Covers losses if your operations are impaired by a government order 13 foster.com
Potential Coverage, cont. Supply chain coverage • Similar to contingent BI coverage • Does not require direct physical loss or damage • Broader protections against supply chain disruptions 14 foster.com
Possible Responses from Insurance Carriers • Accept the “tender,” and pay claim • Accept the “tender,” and issue a reservation of rights • Deny the “tender” 15 foster.com
Possible Responses from Insurance Carriers, cont. Possible grounds for denial: • Argument that viral contamination is not a “direct physical loss or damage” to covered property • Exclusions for “fungus,” “virus,” “pathogen,” “biological agents,” “communicable disease,” “infestation” or “disease” 16 foster.com
Best Practices • Obtain a complete copy of your policy • Document, document, document! • Work with a skilled professional to prepare a claim • Watch time restrictions • Prepare for the long haul 17 foster.com
Producing and Selling Wine in COVID-19 Times
foster.com Source: WineBusiness.com (last accessed on April 7, 2020) 19 Market Trends
Production • Wine-making facilities are “essential” under “Stay Home, Stay Healthy” Order • Tasting rooms closed, for on-premises tastings 20 foster.com
“To Go,” Curbside Service and Delivery • “To Go”: May sell manufacturer- sealed bottles “to go” from your tasting room • Curbside Service: Request permission for curbside service through Added Activities form • Delivery: Permissible, with submission of Added Activities form (Photo source: Courier Post Online) 21 foster.com
Liquor License Renewals • Required, if premises is operational • Temporarily not required, if premises is closed • Late renewal fees waived through April 17, 2020 22 foster.com
Taxes, Fees and Penalties • Must timely submit sales reports • Late penalties waived (February 29, 2020 – April 22, 2020) • Request for penalty waiver: beerwinetaxes@lcb.wa.gov 23 foster.com
Product Returns • Distributors allowed to accept returns of beer/MB, and to provide credits or refunds • Effective through April 17, 2020 • Wine and spirits not eligible for returns 24 foster.com
Contact Us Em ily Harris Gant Principal, Seattle emily.gant@foster.com 206.816.1454 SEATTLE PORTLAND WASHINGTON, D.C. NEW YORK SPOKANE BEIJING
SEATTLE PORTLAND WASHINGTON, D.C. NEW YORK SPOKANE BEIJING
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