Force Majeure in Today’s Environment
COVID-19 has brought to the forefront the need to use some rarely used contract provisions to protect our contractual rights. One such provision is the force majeure clause.
Force majeure is a French term meaning superior force, and often includes circumstances that are considered “Acts of God.” A typical force majeure clause sets forth a variety of bases for excuse of performance for causes which are beyond the control of the parties to the contract. Some typical examples are floods, hurricanes, earthquakes, riots, strikes and war. When these events occur, and proper notice is provided, the contractor should be able to or may have the contractual right to rely upon the grant of an extension of time consistent with the length of the delay being experienced.
A defining characteristic of a force majeure event is that it is an event that no one could have predicted or prevented. Thus, when the COVID-19 pandemic first began, it was entirely common to use a contractual force majeure clause as a basis to request an extension of time. As the pandemic progresses and we enter into new contractual obligations at Faith Technologies, we realize it will be important to have discussions with our customers regarding specific impacts that COVID -19 is expected to have, in order to give due consideration within the language of the contract. This may include negotiating language specific to COVID-19 related delays rather than expecting a force majeure provision to apply, as these delays are no longer events that could not have been predicted, and in some cases, with proper planning, may be preventable. The end result is that contractors may not be able to rely upon the contractual force majeure language to excuse performance with ongoing or new COVID-19 related delays.
Before engaging in new work in the current environment, a plan for COVID-19 related delays should be discussed and agreed upon prior to contract execution and beginning the work. Developing a plan and defining mutually agreed upon provisions which set forth what will happen if a COVID-19 related delay occurs will provide the best means for ensuring timely project completion to the satisfaction of all parties involved. While the project specific force majeure contract clauses may still be applicable to the event, a mutually agreed upon COVID-19 plan will allow all parties to proceed with the work in the safest, most expeditious and mutually agreed upon manner.