Force Majeure

On March 11, 2020, the World Health Organization declared the worldwide spread of COVID-19 a pandemic. On March 13, 2020, President Trump declared the COVID-19 pandemic a National Emergency. To stop the spread of the virus, the federal and state governments have issued orders for people to stay home and for businesses to close. Many U.S. states are still under shelter-in-place orders while some are loosening their guidelines. Oklahoma temporarily required non-essential businesses to close or work from home as appropriate. The impact of these protective measures have forced some businesses to permanently close, slowed commerce, and made it difficult to conduct business as usual. 

How does this pandemic affect you and your business? Are you able to perform your necessary business functions for your clients or customers? Do the protective guidelines inhibit you from fulfilling your contractual obligations?

If you have a written contract you may be able to invoke a force majeure clause in your contract to excuse non-performance under a contractual obligation.

A force majeure clause is a common clause that appears in numerous contracts. This clause excuses performance under a contract in the event of an unforeseen event or an “act of God.” A force majeure event is a circumstance not within a party’s control and that was unforeseeable. The question is whether the event is so unforeseeable that the increased risk or burden should not be borne by the party. A force majeure clause might include a specific list of events that might constitute force majeure. Typical events include fire, flood, war or riot. If the contract includes pandemics, epidemics, state of emergency or quarantine as a force majeure event, COVID-19 might be applicable under such a clause. Courts construe force majeure clauses narrowly and will look to the specific language of the clause to assess its enforceability in each situation.  Whether a force majeure clause may be invoked is determined by the language in the clause and the particular factual circumstances of the parties.

If your contract does not have a force majeure clause, there might be another way that non-performance under the contract might be excused. Oklahoma recognizes the common law Doctrine of Impossibility. Performance might be excused if it is impossible to perform because of an unforeseen event after formation of the contract. For this doctrine to be applicable the event must have been unexpected, the event was not due to the negligence of either party and the event must have rendered performance commercially impracticable.  Again, the applicability of this doctrine is very dependent on the factual circumstances.

The team at Robertson & Williams is here to help you. Contact us at 405-848-1944 or to see how we can help you and your business during this trying time.

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