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Force Majeure, Business Law and Covid -19

Seeking relief of contractual obligations as a result of the impact of COVID 19?

Force Majeure may be the legal term you're looking for. “Force Majeure” is a French term meaning an irresistible, super human or superior force and such provisions excuse performance when events that are unforeseeable and beyond the control of the contracting party or parties occur. Force Majeure clauses are common and found in many commercial contracts and can apply to one or both parties.

• While Force Majeure clauses are common in business contracts, enforcement of such provisions is not.

• There is little guidance from courts which creates uncertainty about enforceability.

• There are many forms of Force Majeure provisions and their applicability is dependent upon the language of the contractual provision.

• Whether any particular Force Majeure provision might apply in the context of the COVID19 pandemic depends on the language of the provision at issue as well as the jurisdiction in which enforcement is sought.

• A Force Majeure contract clause must be expressly stated (written).

• There is not a "standard" Force Majeure clause.

Three foundational issues to discuss regarding Force Majeure

• Performance of the contract must be "impracticable." It is not enough to show that there was a pandemic. The event must be the reason that performance could not be completed.

• The contracting party seeking to avoid the terms of the contract must not be at fault for either the event or the non-performance. The event must have been unforeseeable at the time the contract was entered into. An increase in the expense of contractual performance or changes in market conditions alone, will not be sufficient alone because those types of economic uncertainties are foreseeable.

• The event must fall within the scope of the contracts Force Majeure terms.

Will courts and arbitrators accept a declaration of a state of emergency as a trigger of a Force Majeure provision?

• Force Majeure" describes those uncontrollable events such as war, labor stoppages, or extreme weather.

• It would be a rare contract that adds "pandemic," "public health crisis," or "disease" to the list of uncontrollable events.

Force Majeure claims will depend on the facts and circumstances of your situation and the specifics of your contractual arrangement

• Force Majeure may provide relief from your contract as a result of the devastating impacts of COVID 19.

It is expedient that you seek legal counsel to explore the meaning of the Force Majeure terms written in your contract as they are contract specific making it imperative that you seek legal counsel to determine your rights. You may qualify for relief under other provisions such as frustration of purpose and impossibility of performance. We will explore these topics in future blog post later this week.

This area of law can change rapidly and tends to be fluid in nature. The information is current as of the date of blog publication. To learn more regarding the most current state of the law contact Jace Kentner at 573- 708-7870 or to explore your legal rights.

- Disclaimer -

Kentner Law provides material for informational purposes only. The material provides herein is general and is not intended to be legal advice. The choice if a lawyer is an important decision and should not be based solely upon advertisements.

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