Force Majeure Clauses During COVID-19 & Other Contingent Perspectives

COVID-19 or the “Coronavirus” has forced all of us to act individually for the collective good but to think globally.

It has forced law firms, large and small, and clients, large and small, to adapt and to plan. We are all in this fight together, and new issues will arise everyday as the repercussions continue. Our transaction team has already come across several issues including one we will discuss in depth below, force majeure clauses.

To protect you, our clients, we believe new clauses will be necessary in your business contracts, both future and existing.

We are here to represent you should breach of contract or other contentious issues necessitate action. We suggest adding the following language to all force majeure clauses in your business contracts:

“All parties to this Agreement may be excused for failures and delays in performance of its respective obligations under this Agreement due to any cause beyond the control and without the fault of such party, including without limitation, any act of God, pandemic, war, riot or insurrection, governmental decree (including but not limited to a mandate, order, law,  regulation or similar), strike, flood, fire, explosion or the inability to obtain the necessary labor, materials or facilities resulting from one of the above referenced events.”

Other considerations include “frustration of purpose” and “impossibility of performance,” which, if included in a contract for one of our clients, would protect them in the event they become unable to perform due to frustration of purpose or impossibility of performance: i.e. because of shutdown of all commerce, unavailable clients or funds or materials, emergency lockdown and shut-in governmental decrees, and other pandemic related community responses.

In light of the impact COVID-19 is currently having on the world from a business perspective (i.e. federal governments globally directing a shutdown of all commerce for the foreseeable future) such a scenario doesn’t neatly fit into one of our typical options.

We must consider current circumstances when speaking with our clients and drafting future agreements and amendments to contemplate and account for such issues.

Our job is to provide some semblance of stability and legal guidance for you, our clients, as you navigate this unprecedented business world. We will do our best to stay on top of the latest developments, particularly as the fields of business and transaction law are impacted by the COVID-19, including, landlord/ tenant agreements, insurance contracts, loan obligations, and contracts for the delivery of goods affected by the disruption of global supply chains.  We are happy to assist clients in reviewing any contracts which may or are claimed to be affected by the COVID-19.

Goosmann Law is here to guide you through this rockiest and most uncertain of times.