Contract Primer – What is Force Majeure and why is it important?
If your contract does not contain a force majeure clause, you may still have the ability to delay or excuse performance under a contract. The common law recognizes that performance under a contract may be delayed or excused due to impossibility, commercial impracticability, or frustration of purpose. Impossibility is when your ability to perform has been destroyed.
The coronavirus has been declared to be a pandemic by the World Health Organization and, closer to home, the State of Ohio has issued numerous public orders closing all non-essential businesses and for citizens to shelter at home. It will be necessary for you to review your contract in order to determine if the coronavirus pandemic will be considered to be a force majeure event or if performance is impossible, impractical, or if the purpose of the contract has been frustrated.
So, your next step should be to pull out the contract at-issue from the filing cabinet (paper or digital) in order to determine if a force majeure event has occurred or if performance is impossible, impractical, or frustrated. If yes, then you will have to provide notice to the other contracting party that due to the force majeure event performance will be delayed or impossible due to the force majeure event. You will also want to document all of the steps or actions that you have taken in order to secure alternative means of performance. And, you will want to document all of the various impacts that the force majeure event has had on your business – timing of the event, impacted facilities, potential length of delay, etc. If you have any questions about this topic, do not hesitate to contact legal counsel to further discuss these situations.
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