Is COVID – 19 causing a “Force Majeure” Event Under Your Contract?
Is COVID - 19 causing a "Force Majeure" Event Under Your Contract?
Steven E. Grubb, Esq. I April 23, 2020
The Oxford Dictionary defines “force majeure” as an “unforeseeable circumstance that prevents someone from fulfilling a contract.” Many contracts to which you may be a party will contain a “force majeure” clause which is most likely tucked away near the end of the contract with other “boilerplate” terms. In light of the State-wide emergency declaration by the Governor, as well as local emergency declarations by municipalities stemming from the COVID-19 pandemic, these clauses are about to be dusted off and gain new importance. Below are a few things to consider if you think you may need to invoke a “force majeure” clause in your contract.
1. Check the Contract
Does the contract contain a force majeure clause? Many will not. This creates a gray area when it comes to your responsibilities under the contract during this emergency period and should be discussed with your attorney.
Does the contract define the force majeure event? Force majeure events are, by definition, unforeseeable, but some contracts will try to further define what the parties consider unforeseeable and give examples of what is, or is not covered by a force majeure clause. Where do the emergency declarations caused by COVID-19 fit within the definition in your contract?
What does the contract say about a remedy? Even if the current emergency fits the definition of a force majeure event, the contract may provide a wide range of remedies. Some contracts will extend the duration of the contract, while others may allow for termination. Don’t presume that the COVID-19 emergency has automatically rendered your contract null and void.
2. Check your Facts
Don’t make the mistake of presuming that COVID -19 emergency declarations are a force majeure event. While unforeseen, certain contractual duties still may be performed even in a pandemic. For example, if you are able to work remotely during a period of “shelter in place,” a governmental emergency may have no impact on the performance of your contractual duties.
3. Work with your lawyer and the other party
It is never a bad idea to be open with the other party about a reasonable resolution of issues under your contract in these unique times. If you are still not seeing eye-to-eye with the other party, bring your contract to your lawyer.
These are just some general things to consider. Each case has unique facts and circumstances. We are here to assist. sgrubb@salzmannhughes.com or (717)249-6333.