Force Majeure

Due to the COVID-19 virus many people and businesses will be unable to meet their financial or contractual obligations.  As a consequence, we may soon hear the words force majeureThis legal term refers to a situation where living up to your obligations is impossible due to circumstances beyond your control.

In the commercial world, it is common to include force majeure language in contracts. This excuses a lack of performance, when it is impossible or commercially impractical to do so.  The provision is typically invoked in the event of a natural disaster such as a flood or earthquake.  COVID-19 is a natural disaster.

 The question going forward is, will this disaster excuse us from our obligations, be it rent, a car payment, or mortgage obligation? These agreements do not typically include a force majeure provision.  However, courts have equitable powers which allow them to impose a fairness standard. In light of the COVID-19 natural disaster, force majeure may become a viable defense in everyday contractual obligations.

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