Force Majeure & Current Events:
We all have many questions as we grapple with the sweeping effects of COVID-19 on our professional and personal lives. Many may find it difficult or impossible to perform their contractual obligations given the restrictions imposed in response to the outbreak. If COVID-19 makes it impossible for you to perform your contract on time, or at all, consider invoking the force majeure clause.
Canadian Contract Law:
In contract law, force majeure refers to events that are out of the control of the parties and that may make performance of the contract difficult or impossible. The underlying principle of a force majeure clause is that no party to a contract should be held to its obligations if performance is prevented or delayed by events that are both unforeseeable and beyond that party’s control. If you are unable to perform your contractual commitments as a result of the COVID-19 outbreak, a force majeure clause may relieve you of some or all of your obligations.
A force majeure clause typically starts with a list of specific events – for example, natural disasters, such as earthquakes, hurricanes and tsunamis as well as epidemics, quarantines and government shutdowns. If the parties clearly allocate the risk of a specified event, as an event that relieves the parties of their obligation to perform, even if it was foreseeable, it is likely to be enforced by the courts.
A force majeure clause typically ends with a general statement of the type of events (“Act of God”, “unforeseen”, “unavoidable”, etc.) that can be invoked to justify a party’s failure to perform. Even if a specific event is not listed, or the contract does not contain a force majeure clause, a court may still relieve a party of its obligations if the event was unforeseeable and beyond the party’s control.
Additional Resources: Thomson Reuters
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* This article is for general informational purposes only and is not to be construed as legal advice. Please contact Edwards Creative Law or another lawyer, if you wish to apply these concepts to your specific circumstances.