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What is force majeure?
In a legal sense, force majeure addresses what happens when a contracting party suffers events outside of its control. Usually such events prevent that party from performing, or continuing to perform, its obligations.
That sounds helpful. Will it apply to me?
Since force majeure requires a specific contractual provision, whether or not it applies will depend on what is contained in your contract. There are dramatic variations in the breadth and depth of force majeure clauses, but essentially any contractual party will need to identify two questions. Firstly whether current circumstances are such that they are capable of triggering the force majeure clause in the first place, and secondly, what are the implications for them?
Is force majeure triggered by the Coronavirus COVID-19?
It is impossible to say without a careful examination of your contract. Classification by the World Health Organisation as a pandemic is certainly helpful, but not conclusive unless the clause specifically includes such a reference. If not, it could be argued that it falls into the same category as a natural disaster or act of God. The important part for the purposes of the provision is that this prevents that party from performing its contractual obligations. Whether or not this is the case will depend on the actual facts and circumstances, and it could be that it is not COVID-19 which is the disrupting agent but rather the centrally imposed action to stem its spread.
What types of contracts are likely to be affected?
I'm confident that my contract allows for this scenario. So what's next?
So I can just sit back and do nothing?
Is that it?
OK, I have done all that, and there is no way out. Even a delay will not help. What next?
I don't have a written contract, or my contract doesn't contain the necessary provisions. Can I still invoke force majeure?
Any final thoughts?
Businesses facing COVID-19 related issues might like to review their insurance arrangements. These have been in the spotlight recently with many commentators doubtful that standard policies will provide suitable cover. Like most commercial matters it pays to take professional advice on all aspects of your arrangements.
Additionally, since the effects of COVID-19 are so widespread, it is possible that the case law surrounding force majeure and frustration may be due for further refinement in the months and years ahead.
If you would like to find out more about how the team can help you, contact our Company Commercial Team to arrange a free legal review.
This article was written by Edward Garston, Partner in the Company Commercial Team at Pinney Talfourd LLP Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of March 2020.