The Face of Force Majeure: Contracts and Pandemics

A Force Majeure clause is often written into contracts to address unforeseeable circumstances that prevent someone from fulfilling their contractual obligations. Essentially, it frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, epidemic or an event described by the legal term act of God (hurricane, flood, earthquake, volcanic eruption, etc.), prevents one or both parties from fulfilling their obligations under the contract.

In the face of the current pandemic, many businesses have found themselves looking toward this clause for relief. On the larger scale, Continental Resources (NYSE:CLR) declared force majeure on at least one of its contracts to deliver oil to a fuel producer last week, as crude oil prices tank. Oklahoma has asked the President to declare coronavirus an Act of God to help oil producers. You may not be a publicly traded corporation or an oil giant, but the outbreak can impact you just as dramatically. We have been in contact with business organizations that are looking at their options relative to their contractual obligations. Moving forward, it is prudent to include specific language regarding pandemics or epidemics in contractual language, as they are certainly an unforeseen circumstance (should the parties agree, of course). This will prevent any ambiguity when it comes to finding a way out, when your livelihood depends on it.

Questions about your contractual obligations? Interested in being proactive and protecting yourself moving forward? Contact Great Lakes Legal Group today!


Recent Posts

See All