COVID-19, Force Majeure Clauses and Contractual Nonperformance

Source: Vedder Price

Originally published on: 3/23/2020

As governments around the world work to contain the COVID-19 pandemic and the public is reintroduced to the phrase "shelter-in-place," another age-old term has quickly emerged as the clause du jour in commercial contracts: force majeure. French for "superior force," force majeure essentially nullifies the parties' contractual obligations and frees them from liability, but only upon the occurrence of an extraordinary event or circumstance beyond the parties' control.

In the face of challenging health and safety concerns, companies are taking a closer look at the force majeure clauses in their contracts to assess their obligations when nonperformance becomes an issue. This bulletin summarizes: (i) the factors courts often consider when deciding whether to enforce a force majeure clause; (ii) the steps to take when attempting to rely upon a force majeure clause; and (iii) key takeaways and other considerations when seeking to excuse nonperformance.

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