Force Majeure Clauses may be of importance in real estate and business contracts in response to the Covid-19 Pandemic
What is a Force Majeure clause and how is it applicable in contract in light of the current Covid -19 Pandemic?
Some contracts include what is known as a “Force Majeure Clause”, which may be defined as:
Force Majeure
“An act of God. Force majeure, French for greater force, describes any event that is unexpected by all parties, not caused by any party, and affects the relationship between them, limits the ability of either to perform a duty, or requires one to intrude on a privilege of the other. Contracting parties may use a “Force Majeure clause” to indicate that a party owes no liability to the other in the event force majeure makes performance impossible. Force Majeure may require acts of necessity to save lives or property. In most contexts, an act of God is also Force
Majeure, although Force Majeure includes not only natural events, but also acts by a human agency, such as war or labor unrest, that are usually not within the scope of acts of God.”
The current Covid-19 pandemic will likely cause an increase in litigation related to contracts on the basis of Force Majeure clauses, as parties may claim they were unable to perform on the contract due to the Covid-19 Pandemic. Whether a party will be successful depends on the facts of the case, the wording of the Force Majeure clause and other factors. Some Force Majeure clauses support excuse of performance completely while others may only support an unforeseen delay in performance.
It is important to note that a pandemic is inclusive of an epidemic, meaning that Force Majeure clauses which specifically include the word epidemic will likely also be interpreted to include the current Covid-19 Pandemic. For parties relying upon Force Majeure Clause(s) which include epidemics in their language, this may be favorable. “A disease can be declared an epidemic when it spreads over a wide area and many individuals are taken ill at the same time. If the spread escalates further, an epidemic can become a pandemic, which affects an even wider geographical area and a significant portion of the population becomes affected.”
In the event a contract with a Force Majeure clause does not specifically state an epidemic nor a pandemic, may a party still be excused from performance under the contract?
The answer to this question is “it depends”. Force Majeure clauses which include a “catch-all” phrase would likely be more favorable to support excuse of a party’s performance under a contract in Florida.
Florida case law suggests that Force Majeure clauses broader than the scope of impossibility are enforceable under Florida law, including those allowing foreseeable as well as unforeseeable events to excuse timely performance. Further, regarding Florida contract law principles, Force Majeure clauses broader than the scope of impossibility are enforceable under Florida law, including those allowing foreseeable as well as unforeseeable events to excuse timely performance.
Should you have any questions or need assistance in review of a contract in regards to a Force Majeure clause, please contact Laura Pentel-Klang at Matthews & Jones, LLP at 850.837.3662; or . Ms. Pentel-Klang’s bio is on the firm website, https://destinlaw.com/staff-member/laura-pentel-klang/ .
*This information is provided as general information only and is not intended to be and does not constitute legal advice. The information contained herein should not be relied upon for legal advice.*
