COVID-19 And Force Majeure: A Word Of Caution

The insurgence of the novel COVID-19 pandemic and its ensuing effect on the domestic and global economies has required companies to consider potential remedies should they, or their counterparties, not be able to perform under contracts.  One potential remedy is force majeure.  Force majeure contractual clauses will receive considerable attention in the coming weeks and months as the COVID-19 pandemic continues to evolve, so it is important to understand how they are generally interpreted and applied by the courts.

Wording of the Clause

The typical force majeure clause seeks to provide relief to a party unable to meet its contractual obligations due to extraneous circumstances outside of the parties' control.  The common thread amongst force majeure clauses is that of the unexpected.¹  This is why  a force majeure clause is also sometimes referred to as an Act of God clause.