Can COVID-19 cancel my contract?
Updated: Jul 31, 2020
Force majeure, Latin for ‘superior strength,’ is a contractual clause that excuses nonperformance for ‘acts of God,’ which means unpreventable natural accidents. See Travelers Insurance Co. v. Randall, 264 F.2d 1, 2 (5th Cir. 1959). Even if your contract does not have a force majeure clause, other arguments might be available. Courts excuse performance where unanticipated events render performance impossible or impracticable, or frustrate a contract’s purpose. See Bush v. Protravel International, Inc., 746 N.Y.S.2d 790 (N.Y. Civ. Ct. 2002) (finding a triable issue of fact as to whether New York City's post-911 'virtual lockdown' rendered the adherence to a travel package's cancellation policy impossible) ; Restatement (Second) of Contracts Section 264 (recognizing an impracticability defense due to unanticipated governmental orders and regulations).
Mere adverse economic conditions or non-extreme financial hardship will not excuse performance. And courts may suspend performance, rather than excuse it entirely, during a force majeure event.
If you have questions about your contractual obligations, or if you need help adding a force majeure clause to your contract, please contact our firm for a free consultation,