The worldwide spread of the coronavirus requires lawyers to examine client contracts at risk for disruption or non-performance due to the epidemic. If the contract contains what is commonly known as a force majeure provision, a careful analysis of the clause is mandatory.
Force majeure is a “clause[] excusing nonperformance due to circumstances beyond the control of the parties.” Kel Kim v. Central Mkts., 70 N.Y.2d 900, 902 (1987). One of the dominant news stories of 2020 has been COVID-19, commonly known as the coronavirus. With over 100,000 confirmed cases, including over 80,000 in China, over 7,000 in South Korea, and over 7,000 in Italy, business around the world is beginning to be significantly disrupted. Parties who cannot perform their contractual obligations due to coronavirus (i.e., parties or their employees become seriously ill, or parties or their employees cannot work due to virus-related legal restrictions) may invoke force majeure. There have already been reports of Chinese companies invoking force majeure clauses in contracts in an attempt to avoid performance of their contracts. See, e.g., PetroChina Suspends Some Gas Contracts as Coronavirus Hits Demand: Sources, N.Y. Times (March 5, 2020). With the increasing number of coronavirus cases around the world, including the United States, it is only a matter of time before contract counterparties outside of China attempt to argue that their contractual duties should be excused due to coronavirus.
