If you’ve ever seen or attempted to read a business contract, you know how long these documents can be. You might even be annoyed by all the “boilerplate” clauses thrown into the contract. Let’s face it, the parties really only care about the meat of the agreement; who’s doing or providing what under the agreement, and for how much.
One popular boilerplate clause is the “force majeure” clause. If you don’t already know, the force majeure clause is often found near the very end of the contract. Yes, keep flipping … keep going… yes, there it is!
This clause is meant to protect the contracting parties when they find themselves unable to perform their contractual obligations due to “acts of God” – sounds ominous doesn’t it? Well these extraordinary events, contemplated by this clause, are just that! Hurricanes, war, terrorist attacks, volcanic eruptions, a zombie apocalypse (hey, it could happen!), and epidemics… Now you see where we’re going with this?
COVID-19 has really put these clauses into play as of late. Business owners are pulling out their active contracts and looking to see whether this little clause can provide some relief with respect to all or some portion of their contractual obligations and limit their potential liability for damages.
You’re probably wondering, does my current force majeure clause cover me in light of COVID-19? When relying on these clauses, you have to look at the clause in your contract carefully. For example, does the clause specifically reference situations such as a “pandemic” or “state of emergency”? Even if your contract doesn’t specifically reference this particular situation, you can still benefit from this clause if you can show that performance is impossible due to unforeseeable and extraordinary circumstances outside your control.
When we draft force majeure clauses for our clients, we ensure that the clause is drafted broadly to capture as many unforeseeable situations as possible. It didn’t take COVID-19 for our firm to give this clause the consideration it deserves. We’ve been protecting our client’s business interests from zombie apocalypses for years!
Robin K. Mann, JD