COVID-19 Alert #8 - Force Majeure

Key Takeaways
• Contract terms that indicate that COVID-19 would qualify as a force majeure event are references to a “pandemic,“ “epidemic“ and/or “disease.“ Alternatively, if the force majeure provision does not contain specific disease references, other more generic catch-all provisions pertaining to “disasters,“ “acts of God,“ “national emergencies,“ “government regulations“ or “acts beyond the control of the parties“ may be asserted to allege that COVID-19 is indeed a force majeure event .
• Even in the absence of a contractual provision, there may be a statutory basis for delaying performance or excusing it entirely. Article 2 of the Uniform Commercial Code is likely to govern a number of supply chain contracts, although it is subject to interpretation and thus, disagreement.
• An important factor to assess in determining whether performance might be excused or at least postponed is the distance—in both time and place—between the performance and the extraordinary event disrupting the performance.
• Many force majeure provisions contain specific notice requirements which must be followed to ensure the right to suspend or terminate performance under a contract is effectively asserted.

Read the full client alert below.