The effects of the COVID-19 pandemic is all-encompassing. It’s not only affecting millions and millions of people’s health but also their economic standing. During the outbreak of the disease, establishments closed, causing people to be laid off at work. Small businesses have also filed their closure, as they are unable to cope with commercial rent after months of no operations. Because of this, people are facing widespread financial crises, worrying about their monthly dues, and how to stay afloat until the pandemic dissipates.
In the difficulty to keep up with contracts, may it be lease or commercial, people are trying to invoke the force majeure clause. This is in the hope of legally lifting their responsibilities, especially those of payments.
What is Force Majeure?
Force majeure, meaning “greater force” in French, is a clause in contracts that exempts a party from liabilities in the case of extraordinary unforeseeable events. These events are usually the ones that are out of anyone’s control like natural calamities, war, terrorism, etc. You know, the things that have devastated history.
Contracts such as commercial partnerships and rent usually have a force majeure clause. Other contracts don’t have them because they’re bound to withstand accidents and any unforeseen events. An example would be insurances, but this isn’t to say that you should not consult your trusted personal injury attorney before calling the insurance company. Contracts are tricky, and that’s why parties can’t easily invoke the force majeure clause.
Force majeure requires an act of God so that people involved in the contract are absolved of their obligations. However, courts are strict when it comes to this. Some courts would rule that it’s not enough that no one was able to see it coming because the events should be impossible to avoid and anticipate. After all, the “act of God” is quite arbitrary.
What is an “Act of God?”
An act of God includes events caused by forces of nature, such as an earthquake, flood, or tornado. It’s difficult to prove what an act of God is because there might not be provisions in the statutory law that specify what these impossible events are.
On the other hand, jurisprudence can supply the information for people appealing to invoke the force majeure clause. For COVID-19 alone, there have been several developments in court decisions with petitioners praying for an excuse from payments, transactions, and closures.
Is the COVID-19 pandemic an act of God? Well, that’s up to the judiciary to decide. One thing’s for sure, though: COVID-19 has given pandemics a more permanent place in the force majeure clause.
Pandemics in Force Majeure Clauses
Force majeure clauses either generally write the general definition—“caused by forces beyond control”—or specify the circumstances that could be considered as impossible, unforeseeable events but have long, legal writing of “et cetera” — ”any other events not reasonably foreseen and not within the reasonable control of the parties.” However, pandemics don’t always make the cut. Like most things legal, lawyers and judges could interpret the language of the clause.
For clauses that are general, a pandemic could be covered, but proving the need for an exemption could be a little tricky. The petitioning party should prove that they are, indeed, incapable to fulfill their obligations and that they have exhausted their means to do so.
Specific Clauses Without Pandemics
Clauses that include a list of the force majeure events but fail to include pandemics are the hardest to navigate. In this case, their “et cetera” is so broad that it should encompass a pandemic, but the “et cetera” clause cannot be denied. The most probable scenario is that the decision will base on the classifications of the specified events.
Clauses with Pandemics
These should be safe because the clause specifically interprets a pandemic as a force majeure event. Whether it is placed as a “communicable disease” or a “disease outbreak,” the contract can defend itself in court. Other applicable phrases, such as “state of emergency,” can also be linked to a pandemic.
The world is living in unprecedented times. Back in January 2020, no one would have thought that they will be staying home, designing their spaces in Animal Crossing, or tricking their friends in Among Us. Perhaps, the nagging question at the back of everyone’s head is the how and when this pandemic will end. Until then, people need to survive the next month as the bills keep on coming. In the meantime, consider scanning your contracts for the force majeure clause.