Many business contracts contain a standard clause called a “force majeure” or “act of God” clause. These clauses allow the parties not to perform a contract if performance is impossible due to extreme, unforeseeable circumstances. Each force majeure clause is different, and whether or not the COVID-19 pandemic applies to a force majeure provision will ultimately be determined by reviewing the precise language in the contract together with an analysis of whether performance under the contract is truly impossible (note that payment obligations are almost never considered impossible to perform).
As time goes on we would expect to see a fair amount of litigation over these issues but for the foreseeable future there is little guidance on exactly how COVID-19 can be interpreted other than in comparison to other "acts of God" throughout history.
If you believe that the COVID-19 pandemic is preventing your business from performing a contract, or a partner or a counterparty to contract with your company is asserting force majeure to relieve them from performance obligations under an active contract, please contact us so that we can help you evaluate whether your contract contains an applicable force majeure clause and what to do next.
NOT LEGAL ADVICE
Please be advised that we have provided the information contained here as a courtesy and while we have sought to be as current and accurate as possible we do not represent the accuracy of anything contained here. Nothing contained here should be considered legal advice.