The illness caused by the novel coronavirus, COVID-19, has now
infected nearly 120,0001 people worldwide at
the time of this publication, with the World Health Organization
yesterday officially declaring it a pandemic. In addition to the
human costs, COVID-19 risks disrupting global supply chains,
travel, major events, and workplaces. This memo examines whether
and when a party to a contract can rely on a force majeure clause
due to COVID-19 disruption.
What you need to know
- Can COVID-19 constitute a force majeure (FM)?
It depends on the wording of the clause, the nature of the
party's contractual obligation, and COVID-19's actual
impact on that obligation. Strategically, businesses should
consider all potential knock-on effects of relying on an FM clause
before deciding to rely on it.
- FM clauses are typically interpreted narrowly. Unless the FM
clause includes language that captures an event like COVID-19, some
courts may be reluctant to recognize COVID-19
