Is an outbreak of COVID-19 a force majeure event?
Quite possibly! If the contract contains a force majeure clause then you need to check carefully the wording of that clause.
It's very common for force majeure definitions to generally cover “any event beyond the reasonable control of the parties.” In our view, the Covid-19 outbreak is very likely to meet this definition.
The next thing you need to do is see what the contract requires where a force majeure event occurs. Does it permit termination? Or just suspension until the event has passed? And does it require prior notification before the clause kicks in? These issues need to be addressed before you can rely on Covid-19 as a force majeure event.
If you don’t have a force majeure clause in your contract, you may still be able to rely on the common law doctrine of frustration to get out of your contract, but that can be quite hard to do: frustration is a complex legal doctrine.
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If your business needs legal support with any issues arising from COVID-19, please get in touch with Hans Schumann.
All information in this document is accurate at the time of writing. It is meant for general information only and is not legal advice.