A very likely scenario with COVID-19 would be the inability to fulfill a contract, as an office or team will have to be isolated in the workplace itself due to the COVID-19 outbreak. According to many force majeure clauses, this would likely have the effects and causation necessary to be considered a case of force majeure, provided that the party concerned has taken all reasonable steps. A disruption that simply affects the profitability of a contract may not be sufficient for a claim of force majeure, unless there are express contractual provisions for such a situation. Moreover, an economic slowdown or other generally unfavourable trading conditions would probably not be enough, even if it could be clearly demonstrated that one of the main triggers for the slowdown was COVID-19. The effect of a force majeure clause that only excuses any future performance by one of the parties may constitute a trap when the force majeure event occurs, when a party has acted substantially. For example, in a case involving a contract for a live event at a resort, NetOne, Inc.c. Panache Destination Management, Inc., No. 20-cv-00150-DKW-WRP (D. Hawaii June 5, 2020), the pandemic was considered a force majeure event that exempts both parties from future performance of the contract.
But the party that had booked the event had already paid a substantial down payment – that is, it had almost finished its performance – while the station had done some work in preparation for the event but had not hosted an event. The reserved party filed a lawsuit to recover his deposit. Their claim was rejected because the contract was clear: force majeure released both parties from future benefits, and „nowhere do the force majeure provisions state that if contracts are terminated due to an eligible event, the non-terminating party must repay all down payments.“ (In a subsequent decision, the court upheld its decision and suggested that the reserved party make an unjust request for enrichment.) Many contractual provisions contain a specific list of force majeure events that are considered force majeure events beyond the control of the parties, such as „pandemics“, „epidemics“ or „diseases“. A specific reference to a „pandemic“ will facilitate the force majeure claim, but still requires that the other criteria of a force majeure test be met. If force majeure is not provided for in the contract (or if the event in question does not fall within the scope of the force majeure clause) and a higher-level event prevents performance, there is a breach of contract. The law of frustration is the only means remaining at the disposal of the party who is in default of terminating the contract. If the failure to perform the contract substantially deprives the innocent party of the full benefit of the contract, this is a reprehensible breach that entitles the innocent party to terminate the contract and claim damages for that reprehensible breach.  A „force majeure“ clause (French for „force majeure“) is a contractual provision that releases the parties from the performance of their contractual obligations when certain circumstances beyond their control arise and make performance discouraged, economically impracticable, illegal or impossible.
In the absence of a force majeure clause, the parties to a contract are left at the mercy of narrow common law contractual doctrines of „impracticability“ and „frustration of purpose,“ which rarely lead to excuses for performance. Instead of relying on the common law, meeting planners can gain flexibility in times of crisis through a carefully negotiated force majeure clause. Whether you are negotiating with or without the assistance of a lawyer, the following key elements of a force majeure clause should be addressed: According to the general provisions of the civil law of the PRC (promulgated in March 2017), force majeure is generally recognized as an excuse for non-compliance with civil obligations. If a contract does not contain a provision on force majeure, this is implied. If a contract contains a provision on force majeure, a party may invoke the provision on force majeure or resort to the protection afforded by ordinary law if the scope of the contractual remedy is considered limited. In order to be entitled to protection against force majeure under PRC law, the person concerned must demonstrate that the situation in question is unforeseeable, unavoidable and cannot be overcome and that it is also the cause of the person concerned`s inability to fulfil his obligations. Another instrument of treaty interpretation is the study of the „four corners“ of a contract. Since the purpose of force majeure is to assign the risk of the unpredictable, it is unlikely that a court will find anything that the parties appear to have considered a force majeure event. This justifies the respect of internal consistency in the drafting of contracts. For example, in Zhao v. CIEE, Inc., No. 2:20-cv-00240-LEW (D.
Me. Aug. 31, 2020), the Court noted that while the contract for a study abroad program interrupted by COVID-19 largely provided for refunds in the event of cancellation of the program, it also included an exemption from liability that provided that the company would not be liable for any loss or damage caused, among other things, by an „epidemic“. The applicant student did not receive a refund for the cancellation of the program because the risk of an epidemic was expressly provided for and assigned in another contractual provision. In the military, force majeure has a slightly different meaning. It is an event, external or internal, that happens to a ship or aircraft and allows it to enter normally restricted areas without penalty. One example would be the incident on Hainan Island, where a U.S. Navy plane landed at a Chinese military airfield after a collision with a Chinese fighter in April 2001. According to the principle of force majeure, the aircraft must be allowed to land without interference. These sample phrases are automatically selected from various online information sources to reflect the current use of the word „force majeure“. The opinions expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us your feedback.
When drafting or reviewing a contract, think about the type of violation that an unforeseen and catastrophic event can cause your client to commit a breach. .