{"id":1738,"date":"2020-03-27T18:30:28","date_gmt":"2020-03-27T18:30:28","guid":{"rendered":"https:\/\/www.landersandsternberg.com\/?p=1738"},"modified":"2020-03-27T18:30:28","modified_gmt":"2020-03-27T18:30:28","slug":"does-the-force-majeure-clause-in-my-contract-apply-during-this-coronavirus-pandemic","status":"publish","type":"post","link":"https:\/\/www.landersandsternberg.com\/es\/does-the-force-majeure-clause-in-my-contract-apply-during-this-coronavirus-pandemic\/","title":{"rendered":"Does The Force Majeure Clause In My Contract Apply During This Coronavirus Pandemic?"},"content":{"rendered":"

The World Health Organization declared the COVID-19 as a pandemic on March 11, 2020.\u00a0<\/span>The domino effect on our entire global economy has been swift and profound\u2014businesses are being forced to shut down, our airports are empty and we are all concerned for our collective health<\/span><\/span>. <\/span><\/p>\n

Many businesses and consumers\u00a0<\/span><\/span>are worried<\/span><\/span>\u00a0about the ability to cancel or revise their contracts<\/span><\/span>.\u00a0<\/span>Typically<\/span><\/span>, companies and individuals enter into contracts to mitigate for situations like an unanticipated business interruption, such as the situation we are all facing with COVID-19<\/span><\/span>. <\/span><\/p>\n

Will you be able to cancel your meeting without liability for cancellation fees?\u00a0Will you be able to go ahead with the meeting, despite reduced attendance, without liability for attrition damages<\/span>?\u00a0A key tool in managing the risk of such challenging circumstances is the force majeure clause<\/span>. <\/em><\/p>\n

Force Majeure Clauses <\/strong><\/p>\n

A force majeure clause is a contract provision that excuses a party\u2019s performance of its obligations under the contract when certain circumstances beyond the control of a party arise, making performance inadvisable,\u00a0<\/span><\/span>commercially<\/span><\/span>\u00a0impracticable, illegal, or impossible<\/span><\/span>. <\/span>These clauses are common in contracts and are a valuable resource in determining how to navigate performance when there are issues affecting performance that are outside the parties\u2019 control<\/span><\/span>. <\/span>When determining whether the coronavirus might constitute a force majeure event in your contract, you should consider the following:<\/span><\/span><\/p>\n

A. Does your contract include a force majeure clause or similar provision?<\/strong><\/p>\n

A force majeure clause generally states that the occurrence of certain unforeseen events or circumstances beyond a party\u2019s reasonable control will excuse that party from its performance obligations<\/span><\/span>.\u00a0<\/span>The provision usually lists a series of force majeure events or circumstances, the occurrence of which will excuse performance for the duration of that force majeure event (and sometimes for a reasonable period thereafter) and relieve that party from liability caused by such nonperformance<\/span><\/span>. <\/span><\/p>\n

B. Does the force majeure clause include language that would encompass the coronavirus?<\/strong><\/p>\n

Examine the specific language in the force majeure provision to determine whether the coronavirus\u00a0<\/span><\/span>constitutes<\/span><\/span>\u00a0a force majeure event<\/span><\/span>.\u00a0<\/span>See if the clause\u00a0<\/span><\/span>expressly<\/span><\/span>\u00a0includes a pandemic, epidemic, public health emergency, outbreak of communicable disease, or other similar occurrence as a force majeure event, which would increase the likelihood of enforceability<\/span><\/span>. <\/span><\/p>\n

C. Is the coronavirus the reason the party is unable to perform the agreement? <\/strong><\/p>\n

Establishing causation between the coronavirus and the inability to perform contractual obligations\u00a0<\/span><\/span>is required<\/span><\/span>\u00a0to invoke force majeure<\/span><\/span>. Such a determination will be fact-sensitive.\u00a0<\/span>Even if you agreement includes a provision that encompasses the coronavirus, this will not\u00a0<\/span><\/span>automatically<\/span><\/span>\u00a0excuse performance or relieve it from liability resulting from nonperformance, as you must still meet the other force majeure requirements<\/span><\/span>.\u00a0<\/span>The coronavirus must be the true reason your client cannot\u00a0<\/span><\/span>satisfy<\/span><\/span>\u00a0its contractual obligations<\/span><\/span>. <\/span><\/p>\n

D. Weigh the risks of declaring force majeure.<\/strong><\/p>\n

Before invoking the coronavirus as a force majeure event,\u00a0<\/span><\/span>carefully<\/span><\/span>\u00a0consider the potential ramifications that such action may trigger<\/span><\/span>.\u00a0<\/span>If performance has\u00a0<\/span><\/span>been rendered<\/span><\/span>\u00a0impossible or\u00a0<\/span><\/span>economically<\/span><\/span>\u00a0unfeasible, there may be no other viable alternative<\/span><\/span>. Invoking force majeure may, <\/span>however<\/span><\/span>,\u00a0<\/span>be accompanied by<\/span><\/span>\u00a0business and legal perils. There could\u00a0<\/span>be unintended<\/span><\/span>\u00a0and unwanted consequences that the you should contemplate.\u00a0<\/span>For example, your business\u2019s reputation in its industry could\u00a0<\/span><\/span>be impaired<\/span><\/span>, relationships with critical customers could\u00a0<\/span><\/span>be jeopardized<\/span><\/span>, and the terms of the contract may permit the other party to\u00a0<\/span><\/span>terminate<\/span><\/span>\u00a0the agreement<\/span><\/span>. <\/span><\/p>\n

We\u00a0<\/span><\/span>advise<\/span><\/span>\u00a0clients on\u00a0<\/span><\/span>numerous<\/span><\/span>\u00a0legal issues relating to COVID-19 and its effects, such as force majeure clauses in contracts and negotiating commercial agreements in light of world events<\/span><\/span>. <\/span><\/p>\n

Don\u2019t hesitate to give us a call or schedule a consultation with us. We\u00a0<\/span>are deemed<\/span><\/span> an essential business and will continue to operate 100% <\/span>digitally<\/span><\/span>. We are holding all consultations via zoom or telephone. We\u2019re here to help.<\/span><\/p>\n

 <\/p>\n

 <\/p>","protected":false},"excerpt":{"rendered":"

The World Health Organization declared the COVID-19 as a pandemic on March 11, 2020.\u00a0The domino effect on our entire global economy has been swift and profound\u2014businesses are being forced to shut down, our airports are empty and we are all concerned for our collective health. Many businesses and consumers\u00a0are worried\u00a0about the ability to cancel or […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"nf_dc_page":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-1738","post","type-post","status-publish","format-standard","hentry","category-general","entry"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.landersandsternberg.com\/es\/wp-json\/wp\/v2\/posts\/1738","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.landersandsternberg.com\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.landersandsternberg.com\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.landersandsternberg.com\/es\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.landersandsternberg.com\/es\/wp-json\/wp\/v2\/comments?post=1738"}],"version-history":[{"count":3,"href":"https:\/\/www.landersandsternberg.com\/es\/wp-json\/wp\/v2\/posts\/1738\/revisions"}],"predecessor-version":[{"id":2542,"href":"https:\/\/www.landersandsternberg.com\/es\/wp-json\/wp\/v2\/posts\/1738\/revisions\/2542"}],"wp:attachment":[{"href":"https:\/\/www.landersandsternberg.com\/es\/wp-json\/wp\/v2\/media?parent=1738"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.landersandsternberg.com\/es\/wp-json\/wp\/v2\/categories?post=1738"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.landersandsternberg.com\/es\/wp-json\/wp\/v2\/tags?post=1738"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}