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Explanation of a Force Majeure Clause


If the COVID-19 pandemic has taught us one thing, it is that we must all plan for unforeseen circumstances in order to protect ourselves as best we can. Including a force majeure provision in contracts is one such method of protection. In particular, a force majeure clause enables a party to a contract to free itself from obligation or liability should extraordinary or unexpected events beyond the party’s control (or, “acts of God”) prevent a party from fulfilling its contractual obligations.

Are the effects of COVID-19 “acts of God,” which would release one or both parties from their contractual obligations? It goes without saying that the COVID-19 pandemic has prevented businesses from maintaining their operations and fulfilling many of their contractual obligations.

Nevertheless, that does not mean that businesses have unfettered ability to invoke the force majeure provisions in their contracts. In fact, the applicability of a force majeure provision is contract-specific and is not easily invoked.

Generally, under a contract governed by New York law, a party’s performance (or non-performance, as the case may be) will be excused only if the force majeure clause specifically mentions the event that is preventing a party’s performance.

Therefore, in order to increase the likelihood that a force majeure clause would excuse performance in light of the current COVID-19 pandemic, or any future pandemic, parties to a contract should consider including not only specific references to “pandemics” or “diseases” among the list of specific force majeure events, but also “measures of any government authority.”

In addition, in order to obtain broad coverage to excuse performance during a pandemic, parties to a contract should consider adding language to the force majeure clause providing that the performing party is relieved from performance whether or not the underlying applicable event is foreseeable at the time of execution of the contract.

We have extensive experience in drafting all types of contracts. Please do not hesitate to reach out to us to review your current contracts, revise them as needed, and/or draft new contracts that best protect you.