Word of The Day: Force Majeure

“An irresistible force or an unforeseen event beyond the control of a party, making it materially impossible to fulfill a contractual obligation.”

Talks On Law

If you’re a business (company or entrepreneur), who’s finding it hard to do business during this time, you may be covered by this clause. This legal concept allows either party to limit their liability in an unforeseeable and extraordinary event. Coronavirus has forced major businesses that were “non essential” to close, leaving many out of work due to the act of god.

According to Fast Company ,”Fears of the virus also wouldn’t cut it, even under common law: In an English case from 1922, which set precedent, Hackney Borough Council v. Dore, the judge said, “The expression means some physical or material restraint and does not include a reasonable fear or apprehension of such a restraint.” So, a company may still be obligated to pay a venue for an event it’s unwilling to go ahead with; and a major sporting competition that cancels due to fears of outbreaks among fans may still have an responsibility to media buyers and corporate sponsors. In these instances, force majeure simply may not cut it.”

The Three Distinct Criteria requirements from Shearman and Sterling:

  • the event must be beyond the reasonable control of the affected party;
  • the affected party’s ability to perform its obligations under the contract must have been prevented, impeded or hindered by the event; and
  • the affected party must have taken all reasonable steps to seek to avoid or mitigate the event or its consequences.
Bansal, A. (2015, October 7). Force Majeure and the Law. Retrieved from https://lawzmag.com/2015/10/07/force-majeure-and-the-law/
COVID-19: Force Majeure Event? (2020, March 12). Retrieved from https://www.shearman.com/perspectives/2020/03/covid-19--force-majeure-event
Visram, T. (2020, March 30). What is 'force majeure'? The legal term you'll be hearing a lot during the coronavirus crisis. Retrieved from https://www.fastcompany.com/90482640/what-is-force-majeure-the-legal-term-youll-be-hearing-a-lot-during-the-coronavirus-crisis

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