Can Force Majeure Protect you From Non-performance Due to COVID-19?

If you are a non-essential business forced to close, you may be wondering how you are going to be able to service your clients under your existing contracts.  I have received numerous calls from businesses questioning their degree of liability because they are unable to perform services and provide goods based on the restrictions placed by the government-imposed closures. Though most clients will be understanding of the situation, they still can try to claim damages if you are unable to deliver under your contract.

A reprieve that can assist companies to relieve themselves of liability if they are unable to perform duties under a contract is force majeure clause.  Force majeure clauses justify the suspension of executing duties under contracts that cannot be performed for reasons outside of their control and for which could not be avoided.  For it to be enforceable, it requires the use of specific language and the correlation of the pandemic to the inability of companies to perform their commitments.  Some contracts include some requirements of prompt notice of a claim of force majeure to be enforceable.

There are many unpredictable events that affect businesses that are out of our control and COVID-19 is just one of them.  It is important that you protect your business from unforeseen events. If you are unsure if your contracts contain this specific language or you want to update your contracts to include force majeure, please contact our offices.   

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