Catching Up to a New Normal: The Effects of Shifting Industry Standards on Contract Interpretation

By Karen Chen

During the COVID-19 pandemic, industries around the world were forced to adapt to a new way of life dictated by rising public health concerns. The pandemic’s rapid spread left parties struggling to determine whether contractual performance would be excused or reinterpreted. Issues of prevailing industry standards arose and brought into question the point at which parties and courts should define these standards. While some parties argued that industry standards at the time of contract formation are determinative of performance, others claimed that their agreement referenced industry standards that had changed and that, therefore, their performance obligations had changed as well.

By looking at contract disputes brought about by the COVID-19 pandemic, this Note examines potential issues of contract interpretation that arise when industry standards referenced by the parties change within the life of a contract. This Note addresses these issues in the context of different types of contracts and examines the use of specific language that references industry standards in the agreements. Ultimately, this Note proposes a general application of an ex ante interpretation of industry standards that would avoid issues of uncertainty even beyond the context of the COVID-19 pandemic.