When you can't meet contract obligations: COVID-19 and force majeure clauses

Many businesses throughout the Southeast and the country are struggling with the constant changes brought about by COVID-19. One particular area of concern is whether a business can cancel a contract (whether employment or otherwise) it feels it cannot perform because of the hurdles presented by the pandemic and resulting governmental edicts. Or, the opposite, what to do if the other party wants to terminate or suspend the contract. In many cases, the contract provision on which to focus is the one setting forth the parties' rights if a "force majeure" event occurs.

What is a 'force majeure' clause?

Force majeure, in general terms, is an event that was unforeseeable and has rendered performance of the contractual obligations impossible or impracticable. Florida courts have allowed the enforcement of force majeure clauses that expressly provide for events that don't necessarily render performance impossible and even those that are foreseeable in some cases. Obviously, each state's court decisions must be evaluated to determine the specific nuances of how such clauses are interpreted.

In addition to the force majeure clause itself, we must look at the procedural requirements to invoke it as well as the remedies available to the parties set forth in the contract. Beyond the contract considerations are the external facts surrounding the issue, such as governmental actions, environmental conditions, and how those events have affected performance of the contractual obligations.

Applying a force majeure clause