Is COVID-19 Enough to Qualify as a Force Majeure in Business Disputes?

Is COVID-19 Enough to Qualify as a Force Majeure in Business Disputes?

In a year underscored by all kinds of tumult and uncertainty within the U.S. and abroad, the throughline of 2020 has been the COVID-19 pandemic. The coronavirus that causes COVID-19, a potentially deadly respiratory condition, gradually worked its way around the world in late 2019 and very early into 2020. Until we were a little more than halfway through the first quarter of 2020, it wasn’t apparent to most people that this virus would cause unprecedented disruptions in the way the modern world works.

It did, however, become apparent almost overnight when businesses deemed “non-essential” to people’s needs were ordered to shut down to combat the spread of the new coronavirus and disease it causes. These shutdowns, many of which persist or were recently reissued, forced most businesses to grapple with interruptions to one or more of their contracts, whether they were with clients, suppliers, landlords, lending institutions, or various other entities.

Under such circumstances, could a business owner unable to uphold its obligations in a contract cite COVID-19 as a force majeure event as a defense during business litigation?

Exploring this possibility must be preceded by a force majeure clause in the contract – something that essentially states that either parties’ performance under the contract is subject to “acts of God” (major natural disasters, typically), government regulation, terrorism, disaster, civil unrest, or another emergency beyond either party’s control.

The strength of citing the force majeure clause in your case may depend upon how it’s worded. Some merely refer to “acts of God,” which may not be enough. This is because it’s not ultimately the pandemic itself but the response to it that’s causing a lot of problems for business owners. A force majeure clause similar to the description in the preceding paragraph may provide an adequate cover because it refers to government regulation, which may be a more accurate description of the outside force that’s blocking the ability to perform under the contract.

Do You Need Legal Assistance?

We at The Mirkhan Law Firm are here to provide business owners with the legal support they need when they need to take legal action or defend their interests in court. If you are being sued for a contract breach you believe was caused by outside forces related to the COVID-19 pandemic and government response, we may be able to assist you. Likewise, we can represent clients who need to enforce their contracts when they believe another party is improperly citing a force majeure to relieve themselves of their obligation to the agreement.

Schedule a consultation with The Mirkhan Law Firm today to learn more about what our attorney can do for you. Please get in touch with us by contacting us online or calling (858) 281-2381.

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