Understanding the Act of God Clause
What happened to me? I’ve been gone for a month! I’ll get into that in a separate video, but blame it on COVID-19 and then Hurricane Helene, which is the focus of today’s blog post/podcast. How to deal with contracts and creditors arguing that you just experienced an “act of God.” This applies in situations of a natural disaster, like those of us who experienced it now with Hurricane Helene and Hurricane Milton.
Listen to this blog post.
Hurricane Helene
I was hit by Hurricane Helene and had no power until yesterday—13 days without power. I fell behind with school, but taught three seminars today as I played catch-up.
But today’s post is for the victims of Hurricane Helene and Hurricane Milton. Now, we’re dealing with Hurricane Milton, which just crossed into Florida. I woke up this morning and saw it had already crossed Florida around 5:00 or 6:00 AM.
Unfortunately, you will face issues, whether trying to extend payments on your cell phone, mortgage, or even terminate your lease. I will tell you how to protect yourself because I had to go through this yesterday. Luckily, I knew this area of law, so I was able to cancel a contract.
Here’s what happened: I have a satellite Internet provider, and my lease ends on November 29th. I contacted them two months ago to say I wouldn’t extend the lease because I found something cheaper and better.
Now, my lease is expiring, and my satellite dish is damaged. Extending the lease for another month and a half seems pointless when it doesn’t work. It’s easy to prove I wasn’t using the Internet since I’ve had no power. I also didn’t have cell phone service for maybe three or four days, so I had to go into town to charge my laptop and use my cell phone. The downtown area didn’t have internet for maybe five to seven days.
In my situation with the lease, they told me they would initially cancel the contract and work out a payment plan towards the balance. But that didn’t make sense to me since I could continue making payments and use the service. I was trying to save money. I had to explain to them that this is an “act of God,” which means the contract should be terminated.
Let me explain what that means. You should seek credit if you haven’t had your cell phone for four or five days. There are still people without power, just down the street from me; some have been without power for 14 days, and that will continue for some time. What happens when you try to extend payments, and they say no? Or if they refuse to terminate the lease?
In my situation, the lease is about to end. That’s different from owing $10,000 to Bank of America on your credit card and trying to walk away. That won’t happen, but payments can be extended until life returns somewhat to normal. But let me explain what the Act of God means.
What is an Act of God?
An “Act of God” is a natural disaster, something you have no control over, that affects the ability to perform a contract. My lease with the satellite company means I pay them, and in return, they provide satellite service so I can watch TV, go online, publish videos, etc. But because of the act of God, I can’t use the service.
My satellite dish isn’t working, and they didn’t want to cancel the contract. I pointed out the “Act of God” clause in the contract, which was as clear as day. I told them the other option was to install a new satellite and router and then come pick it up in six weeks, which would be ridiculous. That’s when the “Act of God” clause protects you.
For example, during the COVID-19 pandemic, I had a commercial lease, and I was already beginning to focus on teaching, so that was a good time to wrap up the business. The “Act of God” would have terminated that lease, or at least not forced me to pay for months since businesses couldn’t be open. In my case, it didn’t matter since I sublet the office.
But the act of God clause protects you if a natural disaster prevents you from fulfilling the contract. During COVID, many businesses were shut down for months. In such situations, you could argue it’s an Act of God. Most contracts have an Act of God clause, but if they don’t, it can be argued, and if need be, a lawsuit can be initiated because of it.
In a trial or lawsuit, let’s say from a landlord, you could get out of the lease by claiming it’s an act of God. For example, if the roof came off the property, the landlord could say it’s an act of God and that they can’t fix it overnight. This would take time, and that’s how the landlord could break the lease or vice versa.
Many people are relocating to their parents’ homes or their original states in my area. Suppose you have an apartment lease for 12 months and are 8 months into it, so you still owe for the remaining 4 months. Walking out of the apartment doesn’t erase that obligation. If you have first, last, and security deposits, the landlord can recover one month, but they can still sue you for the remaining three months. The act of God clause can help you get out of that.
For example, you can argue that this disaster area, declared by FEMA or your state and local government, makes it impossible to fulfill the contract. You could say, “Because of this act of God issue, I’m relocating to another state and cannot fulfill the terms of this contract.”
From another perspective, if it were the landlord, they might say they can’t perform their duties. They might be less understanding if it’s a creditor or a satellite company. You must look at your contract for an act of God clause and take advantage of it.
When you call these companies to extend payments, and they refuse, refer to the act of God clause. You can still make that argument even if it’s not explicitly in the contract. Smaller companies or landlords might not include it, but you can argue that it’s an act of God issue. They can verify that the contract can’t continue under the current circumstances.
Going back to my example with Bank of America, this doesn’t mean you’re wiping out your $10,000 balance. The Act of God clause would allow for delayed payments for two or three months until you get back on your feet, and then you can work on it. But it works well with leases or other contracts.
If you have any questions, please post them on my YouTube channel. Now, as to why I disappeared for a month, midway through September, I got COVID for about two weeks. I got hit pretty hard. Some people say COVID never existed, but this was the second time I got it. I had it in 2019, and just as I was recovering, Hurricane Helene hit on September 27th. We left the state, returned the next day, and spent 13 days without power. I couldn’t post videos and had to email the university to explain why I couldn’t teach the courses.
After four or five days, I could go into town when cell phone service was restored and charge my devices at coffee shops. But I can tell you, coming from Florida into Georgia, I saw two cell towers cut in half—it was crazy.
These are challenging times, and my heart goes out to you. Being from South Florida, I’ve dealt with many hurricanes. Hurricane Milton has ravaged the state, as did Hurricane Helene.
Now that I have electricity, I can go online and see videos. There were issues even in areas where my family used to live, like Wellington, Florida. Fort Myers and Broward County had giant tornadoes. My heart goes out to you. Just hang in there. I promise you will get through this.
Don’t Back Down from Creditors
Remember, the Act of God clause can protect you and help extend payments on your credit cards and utility bills. Companies tend to be flexible, but you never know.
You would think that after two years of making payments, my satellite company would end the contract with only a few weeks to go. But it took me telling them to replace the broken dish and then come back in five weeks to pick it up, which would be absurd to resolve this issue. I even received a credit for the 13 days I didn’t have power. Keep that in mind.
That’s it for me and today’s topic. Thank you, everybody. Thank you for watching. Please be safe. I hope all is well after this last hurricane. I feel your pain. I was fixing stuff at the house, and tomorrow, they’re knocking down two trees directly behind me. These trees are way too close to the house and are tilted. I just need to get through today.
Cleaning up, I tripped and rolled my ankle, so I’ve been limping for four days. Now, jumping in my truck to get coffee and charge my batteries is a major project. Parking and walking are tough. When it rains, it pours. What can I say?
Stay safe and stay strong. We’ve been through this before, and we can do it again. Communities always come together during difficult times. I’ve seen volunteers come from other states, driving down with their tractors and sleeping in their trucks, asking how they can help. It’s tough and emotional, but it shows how we pull together.
Remember, the Act of God clause is there to protect you. It means that something beyond your control makes it impossible to fulfill the contract.
For example, if I were delivering 2,000 bottles and my factory got leveled by a tornado, I couldn’t produce the bottles. There wouldn’t be a lawsuit because I would argue it was an act of God. I can’t control it. I don’t have power or a generator to run the factory. That’s a perfect example of how the Act of God clause works.
Use it to protect yourself. Please don’t put up with creditors or satellite companies trying to do what they did to me. Take care, everyone. I hope everyone is safe. I know those of you in Florida are without power for a while, but you’ll get through it. Take care and be safe.
Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. For paralegals and students buying single copies, you can do so via Amazon Books. To access my YouTube channel, click this link.
Need to look for prior blog posts or other categories? Click the links below:
This transcript was edited for clarity.
Discover more from Bankruptcy.Blog
Subscribe to get the latest posts sent to your email.