Is COVID-19 Covered Under Force Majeure Clause? Soto Law Group, P.A.

Is COVID-19 Covered Under Force Majeure Clause?

Written By: Oscar Soto, Esq

With the perpetual spread of coronavirus (COVID-19), businesses are on high alert with their course of business activities, the effect on their employees and clients, and their contractual obligations.  A vital clause to revisit in a business’ contract is force majeure.

A force majeure is a contractual clause found in most construction contracts.  This clause will excuse the performance of a party or parties when an unforeseeable circumstance or event occurs that is beyond the control of the contracting parties.  Unforeseeable events may include war, influenza outbreaks, governmental action (such as mandated shutdown), or Acts of God (such as hurricanes or earthquakes).  COVID-19 may be considered a type of force majeure, dependent on the contractual force majeure language in a contract and the performance being prevented by the virus.

During these times, it is vital for businesses to revisit their contractual relationships and recognize not only their rights, remedies, and obligations but also those of their clients, suppliers, or business partners.  Failure to provide timely notice to other parties of a delay in activities could result in a waiver of a force majeure contract defense or a breach of contract.  If it has not done so already, COVID-19 will impact the future of your business.  Protecting your business during this economic turn is crucial.

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