The SARS CoV-2 coronavirus causes COVID-19 disease.
A force majeure clause in a contract relieves the parties from performing their contractual obligations. Many contracts contain such a provision. Given our current environment of local, state, national and global emergencies as a result of COVID-19, this long-forgotten provision may provide a salvation for a party unable to perform through no fault of her own.
Force majeure provisions are frequently drafted to include valid excuses for non-performance in the event of, among other things, a hurricane, tornado, medical epidemic, labor unrest, acts of war or “acts of God.” Such provisions are generally narrowly-construed, meaning that only a listed event will act as a valid excuse from performance.
In the absence of a force majeure provision, the age-old common-law defenses of “impossibility of performance,” “frustration of purpose” or “impracticability” may provide a defense. These defenses are, however, more difficult to sustain and prove.
A carefully worded force majeure clause is an important tool in drafting a contract under the current circumstances. Taking appropriate precautions at the outset of a contractual relationship will give you the safety, security and flexibility you need in today’s unsettling and unknown environment.