Force majeure: an old idea for present-day issues

On Behalf of | Mar 29, 2022 | Firm News |

The pandemic has upended practically every part of the economy. For example, there are supply chain woes, staff turnover, shutdowns, business closings, business re-openings, economic downturns, and inflation. One or a combination of these factors makes it impossible or impractical to enforce a contract agreement between business partners.

Force majeure clauses are in many contracts

These clauses are sometimes referred to as “acts of God.” Generally, they address mitigating circumstances beyond the control of the business partner or vendor that puts them in breach of their agreement. It does not excuse the business from meeting its obligation to provide deliverables, but it can justify delays in products, services or payment. It could also mean that a landlord cannot build out a commercial space because of a lack of raw materials, or a tenant cannot pay rent because the pandemic shut down the business.

Past, present and future application

Past clauses would include force majeure events like natural disasters, wars, invasions, civil unrests, terrorist attacks, and epidemics. New and updated contracts will likely contain more concise language on pandemics, epidemics, health crises, and government shutdowns.

Always expect the unexpected

These words of wisdom sound like they come from a seasoned business owner who learned from experience. Force majeure clauses can help address the unexpected, but there may still be disagreements over the interpretation of the clause. Still, business partners need to find solutions for their shared issue, which can involve negotiation or even litigation. Those with questions about their contract or a dispute often can get insight from attorneys who handle contracts and business disputes. They may have even recently dealt with a dispute related to the pandemic and interpretation of the force majeure clause.