Although the social media sphere is quick to characterize this year’s parade of horribles as an “Act of God,” that characterization may be more difficult for companies that want to call off their contractual obligations. If you’re negotiating a contract right now and want to preserve an “out” for an inability to perform, check out the recent Vinson & Elkins memo for drafting tips (and for more resources, see the “Contractual Performance” memos that we’re posting in our “COVID-19” Practice Area):
Looking ahead, parties seeking to boost the chances that their inability to perform will be excused should specifically reference the COVID-19 pandemic on the list of events that would qualify as force majeure. In addition, the COVID-19 pandemic should be identified as unforeseeable and unpredictable. The reason: in many states, even if an event is specifically listed, courts require that a party claiming force majeure demonstrate that the event was not foreseeable.
The blog also recommends asking these four questions if you’re on the receiving end of a force majeure notice and want to continue to enforce performance:
- Is the pandemic covered by the force majeure clause?
- If so, is the activity that is not being performed as promised something that actually is being prevented by the covered event?
- Is there a specific exclusion in the force majeure clause for that performance?
- What are the notice requirements — was the notice sent within the specified deadline?
-Liz Dunshee, TheCorporateCounsel.net July 24, 2020
