You may have heard of a “force majure” or “Acts of God” clause in a contract, but maybe you’ve never given it much thought… until COVID-19 appeared, that is. As the COVID-19 pandemic continues to impact the global and national economy, you may find yourself scrutinizing your business lease and other contracts for some clue as to your legal rights and responsibilities during this unprecedented and uncertain time. As you review your contracts, you may have come across something called a “force majeure” clause.
A force majeure clause is a contractual provision that excuses the performance of a party in the event of an extreme, unforeseen event. Force majeure clauses are most common in commercial contracts like leases, real estate purchase agreements, construction contracts or vendor agreements. Each clause will usually address which party is excused from holding up their end of the deal, what part of their performance is excused (i.e. partial or completely) and the steps need to be taken to provide notice to the other parties in case of emergency. A list of events that are considered to trigger the force majeure provision may also be included. COVID-19 is an unprecedented mass emergency, and it may be considered a force majeure event, depending on the language of your particular contract.
If you are currently looking to enter into a new contract or lease, you may consider asking about the addition of COVID-19 or other pandemic level events as a force majeure event or investigating how the other party is currently addressing performance issues for completing their current contracts such as inability to meeting in person, offering payment deferral, issues with a supply train or traveling across various borders.
If you have questions about how COVID-19 might alter your contracts, or if you need help interpreting the language of your contracts, Limitless Law is available to help! Please call us at 360-685-0145 for a free 15-minute phone consultation.