COVID-19 has disrupted many businesses across the globe. One thing that a business wants to be able to rely on is the validity of their signed contracts. Does COVID-19 constitute an “act of God” excusing performance of a contract? Does it trigger a force majeure clause? Here’s what you should know.
What is an “Act of God”?
An “act of God,” strictly from a legal sense, is defined as an unforeseeable or un-guardable act that cannot be prevented or avoided by reasonable prudence, diligence and care. An “act of God” must be the primary cause of nonperformance.
Typically “acts of God” include catastrophic weather events that include, but are not limited to tornados, floods and hurricanes. It does not include economic crisis, termite infestations and sudden power failures.
As COVID-19 has technically been spread by humans, it may not constitute an “act of God”. However, it might be enough to trigger a force majeure clause.
What is Force Majeure?
Similar to “act of God,” force majeure is a contract provision that excuses parties from performance due to unforeseen and unavoidable events. Different from “acts of God,” force majeure has been known to include pandemics, wars and other events that are caused by humans. The two statutes are intertwined in their meaning and use, but it is much easier for a court to throw out “act of God” in situations where human decision-making plays a role.
Is COVID-19 an Act of God
While COVID-19 has certainly caused abrupt government restrictions to businesses and significant changes to day-to-day business operations, it is still unclear as to whether or not it can be used as an excuse for nonperformance. Undoubtedly, state courts will soon begin to hear cases across the country which should put this matter in a more clear light.
Likely, COVID-19 won’t fall under “act of God,” but there is an arguable case for force majeure. Over the next year, attorneys will have to convince the court system that COVID-19 caused nonperformance that was unavoidable or impossible.
Need Legal Advice for a Disputed Contract?
Whether it’s an argument for nonperformance due to COVID-19 or any other contract issue on which you need legal advice, contact the trusted attorneys at The Law Office of Cipparone & Cipparone. With decades of experience, we know how to navigate complex disputes to get the best results for our clients. Contact us today.
**This blog is for general informational purposes only. Cipparone & Cipparone, P.A. does not distribute legal advice through this blog. As such, this blog does not constitute legal or other professional advice and no attorney-client relationship is created between the reader and Cipparone & Cipparone, P.A.
Tags: act of God, business litigation, contract disputes, contract law, force majeure