Force Majeure provisions in an agreement may excuse performance by one or both parties to a contract as a result of events that can neither be anticipated nor controlled.  These provisions range from simple and boilerplate to extraordinarily detailed.  But you may also be excused from performance of a contract if performance of the agreement impossible or impracticable.

In the case of the outbreak of the current coronavirus (“COVID-19 Pandemic”), there are several terms or phrases to look for in an agreement, including a Force Majeure provision, when considering whether an event may provide a party with the ability to be excused from performance.  However, you must also review the entirety of the applicable agreement to determine if there is any specific exclusion or exception to certain events that do not constitute a Force Majeure or otherwise justify non-performance.

• The most obvious is, whether there is any reference to viruses, particular illnesses, pandemic, plague, etc. For example, an explicit reference to a “virus” or “pandemic” would most likely excuse performance based on the COVID-19 Pandemic.  COVID-19’s classification as a “pandemic” by the World Health Organization (“WHO”) will trigger a Force Majeure clause that expressly accounts for “pandemics.”   However, the declaration of this event as a pandemic all by itself - without a reference to pandemics in a Force Majeure clause - will not automatically constitute an excuse from performance given the courts’ focus on whether the event is specified within the specific language in the agreement. Clauses that are silent on pandemics, epidemics, or other viral outbreaks are likely to be insufficient for a Force Majeure defense to performance due to COVID-19, unless, of course, courts change the analysis to account for the existing current situation.  Further, courts may still evaluate whether measures could have been taken to avoid the consequences of the Force Majeure event or if the actions exacerbated the likelihood of the Force Majeure event causing non-performance.

• In addition to the foregoing, the enactment of substantial governmental regulations, as many local, state, and the federal governments have recently done, including limiting the movement of “non-essential” workers, which could impact the supply chain and physical performance on many contracts, as well as on travel, large gatherings and the like have all resulted in significant business interruptions with significant impact on many businesses.  If the applicable Force Majeure provision provides that if inability to perform is the result of governmental orders or regulations which makes performance impossible, businesses may be able to invoke the Force Majeure provision to excuse any contractual obligation to perform resulting from these events.  Although if the provision does not include a reference to viruses, illness or the like, it may be more limited, as any non-performance will need to be caused by government action, not the virus or illness alone.

• Finally, “open-ended” or “catch-all” language does not always work to cover a situation not explicitly stated in an agreement. It is most likely that these provisions will only apply to Force Majeure events that were not foreseeable at the time of contracting.  Courts are typically reticent to allow broadly worded Force Majeure provisions to excuse performance, and whether an unprecedent outbreak of a virus or disease is something that a court would find to be “foreseeable” will vary by jurisdiction.

California Courts’ Interpretation of Force Majeure Provisions

Foreseeability Standard For “Open-Ended”- Catch-All” Provisions

Reasonable Control Requirement

Interpretation of Force Majeure Provisions in Other States

Force Majeure and the COVID-19 Pandemic

Can Performance Be Excused Without a Force Majeure Clause and the Impact of California Civil Code Section 1511?

Impossibility or Impracticability of Performance

Authors:  Jeffrey Gersh 
Celina Kirchner
Crystal Jonelis
Karine Akopchikyan

If you have questions regarding Force Majeure, please contact our COVID-19 Task Force – .

With the COVID-19 pandemic raging, businesses are concerned about whether this event will excuse their performance of agreements they entered into prior to the pandemic, and with the beginning of a new month fast approaching whether to pay the rent on their leases, while landlords are engaged in the same thought process of wondering if the rent checks are going to timely arrive.  That dilemma is especially acute in places like California, with Governor Newsom’s stay-at-home order made on March 19 and its impact on all businesses and the rapidly emptying commercial and non-essential retail space.

Notwithstanding today’s earlier enactment of the $2 trillion stimulus package and the inclusion in that legislation of federal government funding programs assisting both “eligible” and small businesses, consideration needs to be given to the contract terms in all of your business contracts to issues excusing performance.  The contract term that is now on everyone’s’ lips is the boilerplate term often referred to by its French name, called “Force Majeure” literally meaning “superior strength” and oftentimes incorrectly referred to as an “Act of God”.  What you need to do, first, is to carefully understand the terms of your agreements, especially your commercial/retail lease and if there is a “Force Majeure” clause contained in it, to further determine how that clause and others within the applicable agreement may allow one party’s performance of a contract to be excused, either totally or partially.

In California, that is just the beginning of the analysis:  For nearly 150 years an obscure law has remained on the books.  The law is simply titled “Causes excusing performance,” is found in the California Civil Code (§1511) and provides in all its splendor:  “The want of performance of an obligation … in whole or in part, or any delay therein, is excused by the following causes, to the extent to which they operate:  … When it is prevented or delayed by an irresistible, superhuman cause, or by the act of public enemies of this state or of the United States, unless the parties have expressly agreed to the contrary …”

With the weight of California case authority suggesting that an “irresistible, superhuman cause” means an “Act of God,” that likely compels an analysis whether COVID-19 and the pandemic is, or is not, an “Act of God”.  And in this upcoming Holy Season, not surprisingly the short answer is maybe yes, maybe no. There may be other terms in the agreement that would help in this analysis.   While beyond the scope of this brief article and however one may perceive the precise origins of this terrible super-virus, the human spread and contagion don’t seem too God-like, but rather are clearly rooted in human actions.  But look, the statute operates to excuse contract performance qualified by the following key nine words “unless the parties have expressly agreed to the contrary …”  That then begs the question as to what is an express agreement to the contrary?  Must the contract drafters have anticipated a flu-like pandemic, or what about some other type of pandemic?

Added to the analytic mix are additional principles of California contract law, specifically legal doctrines that further operate to excuse performance called “impossibility/impracticability” and “frustration of purpose”. In the former, contract performance may be excused when it is either not practicable or would require excessive and unreasonable expense, not already contemplated by the parties in their contract. In the latter, performance is excused if the purpose for entering into the agreement has been frustrated by a change in circumstances, eg., a stay-at-home order issued by the Governor that results in office/retail space being vacated.

If you have questions regarding a Force Majeure clause in your lease contract, please contact our COVID-19 Task Force - .