Category: blog

Have you read the Small Business Administration’s latest revision of the rules for its Paycheck Protection Program (“PPP”) yet? If not, that’s OK – the rules just changed again.

I am exaggerating, but not by much.  At times, rules were issued and revised on almost a daily basis. Major changes occurred in the night, or over weekends. But was that any way to spend $659 billion – one of the largest economic programs in our history? Congress certainly didn’t plan to save the economy on an ad hoc basis, when it first began to act in April. Similarly, many states’ planned on closings measured in weeks – over six months ago. But as job losses kept rising, Congress was ready to try anything that might work – and to change when it the economy continued to sputter.

For example, the Paycheck Protection Flexibility Act in early June fixed some of the problems that arose in the early funding, particularly requirements to rehire employees – even though many businesses were closed by government order. But giving money away wasn’t easy. In just six months, 24 separate PPP “interim” final rules were announced, according to a lenders’ trade group.

Of course, the PPP wasn’t the only effort to spend our way out of the problems.  So many federal, state and local relief efforts were approved that it became difficult to keep up with all of them. So what have 5,212,128 approved PPP loans, totalling $525,012,201,124 bought us?

(The data is through the program close on August 8, 2020, according to the SBA’s PPP dashboard.

Not much, apparently. But Congress worked so much that the legislators needed a vacation. As a result, President Trump reacted by to bypassing Congress with Executive Orders of questionable legal legality to try to fix some of the problems, and avoid further economic meltdown. But across the nation, businesses remain closed.

One respected political journal proclaimed, “The Paycheck Protection Program Was a Flop”.  (

At the same time, PPP fraud became a stumbling block to further relief.  “Paycheck Protection Fraud Is Massive and Unsurprising”, as massive fraud became apparent in loans to ineligible borrowers, or without any job preservation.  (

Despite their pain, larger businesses ignored significant relief programs, particularly the Main Street Lending program perceived to be expensive and onerous. Schools that tried to reopen have switched to online learning – with all of the problems it presents for students from families without reliable internet access, or for those with disabilities. On a positive note, the national unemployment rate climbed fell from a high of 14.7% in April, to 8.4% in August, perhaps as a result of the PPP largesse.

Continuing its frenetic pace, Congress will likely consider another massive relief bill when it returns from its recess. However, further aid must overcome political disputes over key provisions:

  • Maintaining increased unemployment benefits that ended in late July.
  • “Liability reform” to protect reopening schools and businesses against claims by both employees, students and customers who may contract the virus.
  • Restoring lost business deductions for routine expenses paid with PPP funds – causing increased taxes for businesses already hammered by the effects of the virus.
  • Another round of PPP grants and stimulus payments – they worked so well the first time, why not spend again?
  • Blanket PPP forgiveness for borrowers under $150 million (85% of all such loans), to avoid the delays and expense of manual review of millions of loans for compliance with the complex program rules.
  • Emergency relief for hospitality and transit firms, as safety concerns discourage both business and personal travelers.
  • Support for the Postal Service, critical for both Presidential voting and shopping “by mail”.

Despite all of the stops and starts since March, one thing has become absolutely clear: “man plans, the virus laughs”. Until a vaccine has been finalized and tested for safety, the virus is in control. Business and political planning can only remain a hope – contingent on the success of our public health efforts, and universal compliance with its recommendations. Clear rules will also help – conflicts between states and federal leaders’ advice don’t help to build a national consensus on how to beat the virus. We need the same unanimity our country had in times of crisis, such as World War 2, or the oil shortages of the 1970s.

With US coronavirus deaths alone approaching 200,000, our leaders, political and cultural, must now help build that consensus to restore our economy and our health. Without it, as the Grateful Dead once sang, “Ain’t it a shame?”

P.S.: While you were reading this, the PPP rules changed again.


To most businesses that engage in the negotiation and performance of contracts, life should be simple.  When parties engage in preliminary negotiations, they are not bound by formal obligations until a final agreement is signed, but after a final contract is signed, all parties are bound by the agreements’ terms going forward.

But life is not always so cut-and-dried.  Often, after negotiations break down, one party will claim enforceable obligations arose from negotiations; just as often, after a contract is signed, one party will attempt to “get out from under” contractual provisions, or change the obligations in the contract to those more favorable.

For example, because generally all that is required for contract formation is a “meeting of the minds,” negotiating parties sometimes argue that enforceable obligations arose from mere negotiations, because they agreed on relevant provisions despite the lack of a signed contract.  Other times, a negotiating party will allege that because it relied upon, and took action based upon, representations or a course of performance, an enforceable “quasi-contractual” obligation arose despite the lack of a formal contract.  Further, even if negotiations have concluded, one party may still allege that the other has a “good faith” duty to continue negotiations to consummate an agreement.

After a contract is executed, parties sometimes assert contractual provisions were changed or modified to their benefit.  For example, one party may contend that the failure of the other to enforce certain provisions gives rise to a waiver, preventing later enforcement of those provisions.  Likewise, one can assert that a course of performance is conclusive evidence of the understanding of the parties, even if the signed agreement contains contrary language. In addition, under a theory of fraud in the inducement or justifiable reliance, a party may argue that pre-contractual representations and promises are enforceable, even though they were not contained in the final agreement.

So can a business take steps to prevent it from being bound to pre-contractual discussions, and ensure that the obligations in an agreement will not be subject to change after it is signed?  The answer is that a business should always take care to define and limit the scope of pre-contractual negotiations, and have specific provisions in business agreements precluding post-contractual attempts to deviate from contractual terms.

As to pre-contractual negotiations, Pennsylvania courts enforce pre-contractual provisions that no contract will exist unless there is an offer and acceptance in a specific “mode and manner,” and that no contract can arise until one or both parties have made a “further manifestation of assent.”  Practically speaking, this permits parties to execute a term sheet or pre-contractual description of deal points, while preventing the formation of a valid and enforceable agreement until some specified future event (such as the execution by a specific person of a definitive written agreement) occurs. For example, in  GMH Associates, Inc. v. Prudential Realty Group, 752 A.2d 889, 901 (Pa.Super. 2000), the court found that no enforceable obligation, including a duty to negotiate in good faith, could arise where a term sheet between negotiating parties contained the following provisions:



Any Contract which may be negotiated shall not be binding … until it has been approved by the senior corporate officers and the Law Department of Seller … Such approvals are conditions precedent to the Seller’s obligation to perform … and may be withheld for any reason or for no reason.

To provide even greater protection, other “belt and suspenders” disclaimers can be used, such as a provision that no duty or obligation to negotiate in good faith or to continue negotiations can arise, and “no reliance” and “no course of dealing” provisions, which are discussed below.

Once a written agreement is signed, Pennsylvania courts enforce various contractual provisions precluding the parties from contending after a contract is signed that it is not enforceable as written.  For example, Pennsylvania courts generally enforce “anti-waiver” provisions to prevent the parties from later asserting that contractual provisions have been waived.  Generally, an “anti-waiver” provision will state:

Failure of [the parties] to demand strict compliance with any of the terms, covenants or conditions of this Agreement shall not be deemed a waiver … nor shall any waiver or relinquishment by the [parties] of any right or power hereunder at any one time or more times be deemed a waiver or relinquishment of such right or power at any other time.

Similarly, to preclude a later argument that the parties agreed to an “oral modification” of a contract, Pennsylvania courts generally enforce “no oral modification” provisions, which state generally “this Agreement may only be amended by written agreement signed by both parties hereto or by their duly authorized representative,” or “no agent, representative, employee or officer of [the company] has or had authority to make or has made any statement, agreement or representation, either oral or written, modifying adding or changing the terms and conditions herein set forth.”   To protect against an argument that the parties’ course of performance created a change to a contract, the following provision can be utilized:  “No present or past dealings or custom between the parties shall be permitted to contradict or modify the terms hereof.”

To protect against an argument that pre-contractual representations not included in the final contract induced one party to sign the agreement, Pennsylvania courts generally enforce “integration” clauses, such as “this agreement constitutes the entire agreement between the parties and supersedes and extinguishes all previous drafts, agreements, arrangements and understandings between them, whether written or oral, relating to this subject matter.”  Under most circumstances, such clauses will prevent parties from claiming fraudulent inducement to contract based on statements not included in a signed agreement.  Additionally, Pennsylvania courts will generally enforce “no reliance” provisions to preclude fraud and quasi-contract claims arising from the negotiations and performance of a contract.  This is a sample “no-reliance clause:

[Company A] acknowledges and agrees that [Company B] has not made any representations or warranties to [Company A] except as expressly set forth in the [Written Agreement] and, in making its decision to enter into the [contract], [Company A] is not relying on any representation, warranty, covenant or promise of [Company B] other than as set forth in the [Written Agreement].  Neither party shall rely upon or be bound by any statements (written or oral) different from those in this [Written Agreement] that may appear subsequently in communications between the parties.

Use of these provisions during business negotiations and performance of business agreements can ensure certainty as to contractual obligations, and prevent unexpected contractual liability.

Andrew J. DeFalco is a trial and appellate lawyer and a Member of Spector Gadon Rosen Vinci, P.C.  He represents and advises companies and individuals in complex business disputes.  His e-mail is, and you can connect with and follow him on LinkedIn at


As businesses begin to reopen, business owners face numerous challenges regarding the safety of their employees and their customers and clients. There are several steps that can minimize these risks and help protect the business from claims made by employees or customers.

Health Screening for Employees

            It is permissible, and advisable, to do a certain amount of screening of employees returning to the workplace. Employers may take employee temperatures and may ask questions regarding whether or not they have been exposed to COVID-19, are suffering from any symptoms associated with COVID-19, or have recently traveled outside the area to a COVID-19 “hotspot.” Employers should refrain from asking about any other medical condition unless the employee indicates that they have a medical condition that makes them more at-risk for contracting COVID-19.

Safety Protocols

            All employers should put into place safety protocols that help to promote social distancing and enhanced sanitation. These protocols can include staggering work schedules, separating work stations either by distance or by providing physical barriers, limiting gatherings and meetings, limiting outside visitors to the workplace, requiring that face masks be worn in common areas, and providing enhanced cleaning and hand sanitizing products. Employee contacts should also be tracked in case an employee is exposed to or is diagnosed with COVID-19.

Employees Hesitant to Return to Work

            Employees recalled to work may express an unwillingness to return to the workplace. If an employee has a health condition that makes them particularly susceptible to contracting COVID-19 you may be required to extend a “reasonable accommodation,” which could include permission to work from home or an unpaid leave. A request of this type should be handled like any other request for a reasonable accommodation and a medical certification from the employee’s doctor may be required.
         If an employee is simply afraid to come back to work or does not want to come back because they are being paid more in unemployment compensation than they would earn working, an employer may insist that the employee return to work and, if the employee does not, treat the separation as a voluntary resignation. Any refusal to return to work, particularly if it is because the employee does not want to return because they are making more in unemployment compensation, should be reported to the Unemployment Compensation Bureau.

Customer/Client Waivers

            Employers who serve the general public may want to consider having customers or clients sign a liability waiver. In any event, customers/clients should be asked the same health screening questions posed to employees and should be required to wear face masks.
            If you have any questions or need assistance drafting return-to-work policies or waivers, please contact Nancy Abrams at 215 241-8894 or