EVERYTHING OLD IS NEW AGAIN

OR

THE CONTRACTUAL DEFENSE OF FORCE MAJEURE MAY BE BACK IN VOGUE

An act of God may sound biblical and it may even be biblical, but for lawyers, it has a very contractual meaning. It is generally found in the “Force Majeure” escape clause in some contracts. It is rarely used. In Indiana there are only a handful of cases that even deal with the topic, so finding a way to apply it to our lives in January of 2020 might seem out of place. But in March of 2020, less than two months after the first confirmed case of Coronavirus (Covid-19) was documented in Washington State, we are living in a whole new world.

A “Force Majeure” clause is a contractual provision found in many contracts, typically in commercial leases, that sets forth the criteria by which one or more parties may be relieved of their obligations to perform under the lease in the event something overwhelming prevents a party from performing. Of course, not just any event will be sufficient, it will generally require that the event be so overwhelming as to render performance impossible and not merely inconvenient.

A typical force majeure clause might look like this:

“Force majeure” is defined as any unforseeable causes beyond the control and without fault or negligence of the party affected thereby, such as Acts of God, acts of the public enemy, insurrections, riots, labor disputes, labor or material shortages, fires, explosions, floods, breakdowns of or damage to plants, equipment or facilities, interruptions to transportation, river freeze-ups, embargoes, orders or acts of civil or military authority, or other causes of a similar nature which wholly or partly prevent the mining, delivery and/or loading of coal by the Seller, or the receiving, transportation and/or delivery of the coal by (insert company here), or the accepting, utilizing and/or unloading of the coal by (insert other company here).

In the weeks and months ahead, governments, Federal, State and local, will be forced to issue public safety orders that will make operating some businesses impossible. Those orders coupled with the economic disaster and the need for social distancing may very well cause a great many businesses and individuals to seek some sort of relief from their contractual obligations. In the shadow of this pandemic, the “force majeure” defense will be a hot topic.