When a contractor cannot meet a deadline, a manufacturer cannot produce the desired number of products, or a sales person cannot meet a quota, then they might investigate whether their contracts allow noncompliance because of a force majeure clause.
This is not a careless misspelling; this is old French for “superior force.” A force majeure clause typically excuses a party (permanently or temporarily) from having to perform the contract because of strong, unexpected, outside forces. It is not uncommon for parties to a contract to gloss over such “legalese” and focus instead on the business terms. These days, however, force majeure clauses are getting renewed attention.
Common examples of such a “superior force” are wars, earthquakes, labor strikes, hurricanes, and the like. COVID-19 is also likely to qualify, depending on the exact wording of the contract. Even in the absence of such a clause, conventional contract law can excuse performance for “impracticability” and “frustration of purpose” when extraordinary and unexpected conditions occur.
With COVID-19 disrupting commerce in unimaginable ways, a force majeure clause could be of major importance in many contracts. In the aftermath of this serious outbreak, as parties seek to enforce—and avoid—contract provisions, force majeure clauses are likely to figure prominently.
In light of all the disruption caused by COVID-19, our business and litigation attorneys can help you navigate the challenges ahead.