Can my force majeure clause protect me against the economic impact of coronavirus (COVID-19)?

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Published on LexisPSL on 18/03/2020

The following Commercial Q&A provides comprehensive and up to date legal information covering:

  • Can my force majeure clause protect me against the economic impact of coronavirus (COVID-19)?
  • Is there a force majeure event?
  • Has performance been prevented?
  • Did the force majeure cause the non-performance?
  • Do I have to mitigate the effect of the force majeure?
  • Can I cancel the contact?
  • Will I still be paid?
  • Can the customer challenge the validity of the force majeure clause?
  • What happens if I trigger the clause, suspend performance and I get it wrong?
  • What other contract management options should I consider?

Is there a force majeure event?

In English law, the expression ‘force majeure’ does not refer to a legal doctrine. Instead, the expression ‘force majeure clause’ is used to describe a contractual term which provides that, on the happening of a specified event or event beyond the parties’ control, one (or both) of the parties:

  1. is entitled to cancel the contract (or it may be cancelled automatically)

  2. is excused from performance of the contract, in whole or in part

  3. is entitled to suspend performance or to claim an extension of time for performance

Whether or not a force majeure clause will assist in suspending performance obligations under a contract or give rise to a right to terminate a contract will be subject to the particular drafting of the clause and the general principles of contractual interpretation should be applied. See Practice Notes: Contract interpretation—the guiding principles and Contract interpretation—rules of contract interpretation.

It will be necessary to check to see if the definition of force majeure is wide enough to cover coronavirus (COVID–19) or the impact of coronavirus (such as supply chain disruption). If pandemic is not specifically referred to, does it fall within one of the itemised ‘Force Majeure Events’? For example, ‘Act of God’ is often used in force majeure clauses but would it cover the specific circumstances? For further commentary and examples of how

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