Making Sense of Force Majeure Clauses in the Context of COVID-19
Many of you will be familiar with the concept of force majeure or “superior force”, a common clause used in contracts to protect against unforeseeable circumstances that prevent a party from fulfilling its contractual obligations. But, can a force majeure clause be relied on to release a party from its obligations in light of COVID-19?
While force majeure clauses will not feature in every commercial contract you should be aware that the clause in question need not be expressly headed “force majeure” and if you cannot find a clause with this heading then you should check carefully for any clause which anticipates an event of “superior force” which is beyond the control of the parties to the contract.
If your contract does contain a force majeure clause, the question of whether such a clause would be triggered depends on the exact drafting of the provision (as such clauses can vary substantially) and the rules of contract interpretation. Has the concept of a pandemic been covered within the drafting of the clause in question as a force majeure event? In the absence of this, references within the clause to a Government-imposed change which prevents performance of the contract might be useful in light of the Government response to COVID-19 (and this is commonly included in the drafting of such clauses). However, the inclusion of a specifically defined pandemic-related trigger event (as a above) would be better to rely on.
If you believe that you can rely on such a clause then, as the party seeking to rely on the clause, you will bear the burden of proof, firstly to demonstrate that the scope of the clause covers the circumstances surrounding the COVID-19 outbreak and secondly to demonstrate that the specific facts in question fall within that scope. You will need to establish that COVID-19 has prevented or hindered you from performing the contract.
You will also usually be under a duty to show that you have steps to avoid the effects of COVID-19. You should ensure that you have complied with all UK Government guidance in relation to COVID-19 as failure to do so may prevent you from relying on force majeure.
It is also important to ensure you have complied with all contract formalities. If you wish to invoke force majeure, it is likely that notice will need to be given to the other party (or parties) in a specific way and within a set time period. Failure to pay attention to such a notice provisions could mean that you will not be able to rely on force majeure.
If you can establish force majeure, you will again need to check the specific drafting of the clause for the options available to you. Short periods of force majeure may allow you to delay performing your obligations under the contract without being in breach. It is also likely that lengthy periods of force majeure will lead to a right for you to terminate the contract.
For more information on what to look for, please contact Emily Steed at firstname.lastname@example.org.