Why Force Majeure Clauses Matter During the Pandemic
“Force majeure” is French for “superior force,” and a force majeure clause has to do with just that. In the case of a force majeure clause, a party may be relieved of their contractual obligations based on the presence of circumstances beyond their control. Examples of these circumstances may include natural disasters or acts of God, war, terrorism, or even an unprecedented pandemic. The actions taken during the course of COVID-19 have brought the force majeure clause to the forefront in many contracts. Because of its impact on many businesses, it is important to understand what it means.
How Do I Know If A Force Majeure Clause Applies?
If a force majeure clause applies to a particular situation, the determinations are based on the facts and the outlines applied in the specific contract as opposed to the general concepts of the force majeure clause itself. Impact of the circumstances surrounding the pandemic have to be proven to have caused hindrance, delays, or even complete prevention of the affected party to provide the goods or services outlined in the contract.
If a company is looking to rely on a force majeure clause to prevent a breach of contract, other things must be proven as well beyond hindrance, prevention, or delays. The company will have to prove that the circumstances are what caused these issues in the first place. The company will have to prove beyond a doubt that the non-performance was completely beyond the scope of their control. And the company will have to prove that there were absolutely no steps or measures they could have taken to provide the goods or services outlined in the contract once the outstanding circumstances occurred.
Coronavirus and Force Majeure
In most cases with a full appraisal of the contract involved, the coronavirus pandemic will likely allow for invocation of the force majeure clause as it is included in any contract. The World Health Organization’s official declaration of a pandemic, as well as government mandated closing of many businesses and schools, provides the mitigating circumstances necessary to consider a force majeure clause a logical course of action. However, recipient businesses also have rights under force majeure, as well. Notification of a force majeure claim must be made immediately upon decision. And furthermore, there is normally a limited time allotment for a force majeure clause, with many companies having the option to terminate a contract after a specific number of days.
Contracts and force majeure clauses in the wake of the Coronavirus pandemic can be riddled with confusing words and terms that make it unclear as to whether a business can be held liable for a breach of contract when it comes to delivering goods and services. Even if your contract does not contain a force majuere clause, you may be able to invoke a legal principal such as impossibility, which may excuse performance. The application of legal principles such as force majuere and impossbility varies by jurisdiction, and their availability to you may depend on how the facts surrounding your circumstances are presented. The knowledge of an attorney that has experience navigating these principles and piecing together the facts that are required to invoke them is an invaluable asset to have while you evaluate your best course of action. If you are struggling because of the Coronavirus pandemic or your business has found it necessary to invoke a force majeure clause with your contracts and you need help understanding these trying times, let King & Jones help you today. Our experienced Chicago business litigation lawyers can help you understand your rights better.