Force Majeure Clauses and COVID-19

Many contracts include what is commonly known as a “Force Majeure” clause. “Force Majeure” translates literally as “superior strength.” Force majeure clauses may also be known as “Act of God” clauses. A force majeure clause is intended to reduce or alter contractual obligations should a major event occur which renders the contract impossible to perform. Contracting parties should be aware, however, that force majeure clauses are like any other clause – if it is not included in the contract’s language and agreed upon terms, it is not inherently a part of the contract.

Often, the contract will specify what constitutes a “force majeure” sufficient to trigger the clause. Contracting parties need to familiarize themselves with the conditions enumerated in their contracts. Typically, war, terrorism, catastrophic weather events, and acts of government are included. Other items such as plague or pandemic may occasionally be included in the contractual language but are not commonplace. In Utah, contracts are interpreted expressly as to the plain and unambiguous terms. A wise contractor will be aware of what is and is not included in the contractual language.

Simply because “pandemic” may be included in a force majeure clause does not mean that the clause is triggered. The second element for enacting the clause is whether the event rendered performance of the contract impossible. Mere difficulties or changes in expected profits, for example, are not sufficient to trigger the clause. The event must make it impossible for the party to perform. Of course, it is a factual issue, possibly in each claimed event of force majeure, whether the event arose to the level of excusing performance of contractual obligations. It may be so for one contract, but not for another, depending on the obstacles and conditions faced by parties in different situations.

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