As the NCAA and the NFL try to navigate their 2020 seasons amid frequent game postponements and live fan attendance, perhaps an analogy works to ask where things stand concerning force majeure clauses in commercial agreements and the various health-based restrictions that have made performance of many contracts impracticable, if not impossible.

Most business contracts contain a force majeure provision, which excuses performance of a contract due to unforeseen circumstances: floods, wars, civil unrest, government restrictions and, yes, sometimes even pandemics. Back in March and April, as we dusted off these provisions, we often found that the rapidly-spreading COVID crisis was likely covered by a specific term like "pandemic" or, more generally, by force majeure events like "government regulation" or "travel restrictions"—all of which were likely to apply to the closures and restrictions being implemented around the country and across the world. Even if contracts didn't contain force majeure provisions, the parties' performance obligations could in many cases be excused by the various lockdowns and business closures that were being ordered by health boards, governors and local executive authorities under traditional common law doctrines like "impracticability of performance" or "frustration of purpose."

But as we move well into month nine of these restrictions, and beyond, how well do these force majeure provisions and common law doctrines stand up against the slew of executive orders still in place, expiring without renewal, or now even being re-implemented as COVID "positivity rates" are jumping across the national grid-iron? Is it the Fourth Quarter, the final weeks for most of the restrictions? Or are agreements around the world going to continue to be subject to overtime, or worse, a series of open-ended postponements before the agreements can be completed?

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM Digital Member, you’ll receive:

  • Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.