As governmental and private actions intended to slow down the spread of COVID-19 continues through their directives, there has been an increased focus by many on whether the impact of these actions can excuse their company from failure to execute, or perform a contract within an agreed time as performance under what may have become burdensome.
This thought by many business owners has shifted the minds of many legal practitioners to the clause “FORCE MAJEURE” and the importance of it being included in a contract agreement.
This piece is meant to explain in simple terms what “Force Majeure” is
Force Majeure means an unforeseeable circumstance which prevents a party from fulfilling a contractual obligation. Take for example, Mr. A entered into a contract with Mrs. B to supply 500 crates of eggs but Mr. A could not supply it because his warehouse collapsed. At this instance the contact has become impracticable and Mr. A will not be held liable for failing to supply these crates of eggs if the force majeure clause was included in the contract.
Many contract agreements tend to include words such as “contracts being terminated by parties, frustration, unforeseen circumstances- act of God etc.” these are the force majeure or hardship clause.
The restriction of movement on citizens and the social distancing directive by the government in order to reduce the spread of covid-19 in the country has in many ways prevented companies, individuals from performing and fulfilling their contractual duties.
So pick up that agreement once again and check if any these terms were included in the contract.
For further information or questions, you can contact finnihtunde1@gmail.com
