How pandemic panic can affect your contract – coronavirus and force majeure

Thanks to coronavirus, parts of China are in lockdown, companies are closed and movement is limited. One consequence is that many businesses who buy and sell goods in the Chinese market can't perform their contractual obligations and are looking to rely on force majeure clauses to protect them.

What is force majeure?

Force majeure is often a legal stipulation in contracts. It is an exceptional, external and unanticipated event or situation which prevents a party from performing its contractual obligations. Commonly, terrorist attacks, floods, earthquakes and acts of war are defined as force majeure events. A force majeure clause may allow a party to avoid liability for non-performance, to revise elements of a contract (e.g. to adjust delivery dates) or even to terminate.