🔒How to navigate Maine’s essential contract law in the age of COVID

As a small state, Maine has a relatively thin canon of legal cases interpreting or applying major principals of the common law of contracts. But here are a few cases that are topical, unique or new that lawyers should keep in mind when drafting contracts or providing advice to clients regarding existing agreements.

Force majeure

In the age of COVID, there has been renewed focus on the so-called “force majeure” provisions of agreements. These clauses permit parties to a contract to escape liability for failing to perform if that failure is the result of an “act of God” or other circumstance which renders performance impossible or impractical.

Like many contract law issues, there is not a lot of caselaw in Maine on force majeure provisions, but there is one case on point from 1857.

In Lameman v. Pollard, the court held that a neighborhood outbreak of a contagious disease, cholera, excused performance under a labor contract. The court held that the “plaintiff was under no obligation to imperil his life by remaining at work in the vicinity of a prevailing epidemic so dangerous in its character that a man of ordinary care and prudence, in the exercise of those qualities, would have been justified in leaving by reason of it, nor does it make any difference that the men who remained there at work after the plaintiff left were healthy, and continued to be so.”

For contract drafters today, the critical take-away is to broach the subject of COVID-19 and have the parties agree as to its impact on their rights going forward.

Waiver of subrogation

Many or even most contracts involving the provision of services, especially in the construction area, contain a provision pursuant to which the contractor agrees to indemnify the customer against claims for injuries suffered by the contractor’s employees while on the job site.

In Fowler v. Boise Cascade Corp., a 1991 case, applying Maine law, the First Circuit held that those provisions are ineffective, unless the contractor explicitly waives its right to immunity under the state’s workers’ compensation laws and agrees to be responsible for claims brought against the customer.

This seems like a very arcane point. But the impact of it is significant. If you are drafting an agreement in which you hope to achieve the outcome of having the contractor indemnify the customer, which is a very commonly attempted outcome, then your contract must intone the magic words described in Fowler v. Boise Cascade.

Implied duty of good faith

Many if not most contracts contain a provision known as an “integration or zipper clause.” These provisions mean that the final version of the agreement contains the entire agreement between the parties. The point of an integration clause is to avoid post hoc efforts by one of the parties to introduce evidence that the parties actually agreed to something different than what the words on the page say.

In a 1995 case, the Maine Supreme Court said, “Not so fast.”

The case, Top of the Track Associates v. Lewiston Raceways Inc., stands for the proposition that the law may impose obligations on the parties that are not contained within the four corners of the document such “implied provisions as are indispensable to effectuate the intention of the parties.” Although the fullest implications of that statement have since been pared back somewhat, the takeaway for contract drafters is to consider and memorialize the fundamental assumptions of the parties regarding their contractual undertaking.

Kevin Haley is an attorney and contract law expert at Brann and Isaacson in Lewiston. He can be reached at khaley@brannlaw.com.