Covid-19, Force Majeure, and Cash
Are you in a contract that requires a large cash outlay for something no longer needed, required, or going to happen because of Covid-19?
Could you invoke the Force Majeure clause of the contract and keep your cash?
If you are thinking about these issues, then think about them with your lawyer. Here’s what will be going through his/her mind:
Many contracts contain force majeure clauses which define what happens when an extraordinary event occurs which is beyond the control of the parties. The words in these clauses are never given much thought and often subject to interpretation and in no event apply to events that merely impact profitability rather than ability to perform.
If you have a force majeure provision that references Covid-19 or even pandemic, then you may be in luck. If a contract does not have a force majeure clause the Uniform Commercial code governs. The UCC specifically excuses a seller from timely delivery or non-delivery of goods where its performance has become impracticable because of government regulation or if the event frustrating performance was the basic assumption on which a contract is made. Your lawyer will need to analyze whether your facts and circumstances meet the UCC standard before you take action based upon force majeure arising from Covid-19.