Covid-19 likely to cause many force majeure terminations of contract

If any of these organisations are successful at invoking force majeure it will suspend their obligations under their contract for as long as the event persists. Although this seems entirely reasonable in relation to the affected party, this may leave the other party in an untenable situation.

Whether Covid-19 affects existing contracts depends largely on the specific wording of the contract and the parameters of the definition of force majeure. It is unusual to have a closed list of force majeure events and there is often “catch-all” language to include events not specifically listed but that fulfill the broader criteria of the definition.Fortunately for some contracting entities, their force majeure clauses may include specific references to “epidemic” and “pandemic”.

While a party may be excused from its performance under the contract while the force majeure continues, there is usually an obligation to use all commercially reasonable efforts to alleviate and mitigate the cause and effect of the force majeure event and resume performance of its obligations once it is able to do so. However, if the stoppage continues for an extended period, there is sometimes a right to terminate the contract by either party.

And many many bankrupcies and many suicides.

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