Five Key Force Majeure Considerations in the COVID-19 Era

Five Key Force Majeure Considerations in the COVID-19 Era

  1. Consider why force majeure may need to be invoked. Proper identification of the force majeure event will be very important. Determine what specifically is causing an impact on the party’s ability to perform under the contract, such as stay-at-home orders, shut-down of non-essential businesses or issues with the supply chain.
  2. Examine whether the force majeure provision is triggered. What law governs your contract? Does the force majeure provision broadly excuse performance issues for events caused by conditions outside the reasonable control of the invoking party, but not list specific events? If specific events are listed, is the event at issue specified in the force majeure provision? Is the event at issue specifically excluded in the force majeure provision? Will the language used protect you in the specific jurisdiction?
  3. Determine what other elements are covered in your force majeure provision. Does the governing law of the contract require notice, unforeseeability, mitigation? Should your provision include any “magic language”?
  4. Consider whether other contractual defenses may apply. The common law doctrines of impracticality/impossibility of performance, frustration of purpose, material adverse change, and illegality may be helpful, especially if the contract does not include a force majeure provision or the force majeure provision is not helpful or triggered by the event at issue.
  5. Do not treat force majeure as boilerplate when drafting contracts.

See our complete checklist here.

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