Force Majeure & CoVid-19: What Are Your Rights?

Force Majeure sounds like the latest Call of Duty game, but it is a legal concept in contract law that most people are not aware of. It originates from a French legal concept that recognizes that some things not foreseen that can prevent the performance of a contract. The terms translate directly to mean “Superior Force” and refers to what is commonly known as “acts of God,” “war,” disaster,” “pestilence,” or “famine.”

Many contracts have what is termed a “force majeure” clause that excuses a party’s performance if it is prevented under such an event that would be considered a superior force, such as the CoVid-19 or Corona Virus. There are two things to look at regarding a force majeure clause. First is what is defined by the contract as a force majeure. Usually, a contract will contain a laundry list of what is considered a force majeure event. While the global pandemic is probably not mentioned by name, there is usually a catch-all phrase that includes things that would be regarded as a state of emergency.

The second and more important consideration is that the superior force must prevent performance. There is no doubt that the current state of emergency that was declared by the President, the Governor, and just about every local government in the wake of CoVid-19 is a force majeure. However, does the event prevent the party from seeking protection from performing the contract? That depends on the facts and circumstances of each case.

On the one hand, a person diagnosed with the virus or quarantined is protected from the performance. Business shut down by a “shelter in place” order may be protected; however, if the company was allowed to operate as an “essential business” may not be. In other words, the declaration of a state of emergency is not absolute protection. The protections afforded are spelled out in the contract.

For force majeure to have any legal effect, it must be written into the actual contract. In some situations, executive orders requiring a “shelter in place” or other federal, state, or local orders may make the performance of a contract impossible, the legal protections without a force majeure clause will vary on a case by case basis. Know your rights and consult a lawyer