Examples of the Range of Force Majeure Clauses
Jeffrey R. Schmieler, Esquire 1. Example from a Services Agreement: Neither Party will be liable for any failure or inability to perform, or delay in performing, such Party’s obligations under this Agreement if such failure, inability or delay arises from an extraordinary cause beyond the reasonable control of the non-performing Party; provided that such Party diligently and in good faith attempts to cure such non-performance as promptly as practicable. 2. Example from a Labor Agreement: If a production cannot be performed and/or the theater cannot operate because of fire, accident, strike, riot or act of God, or the public enemy, which could not be reasonably anticipated or prevented, the Employer will only be responsible to pay one (1) day’s pay to each employee who lost at least one (1) day’s work regardless of how long the incident lasts. 3. Example from an Employment Agreement: Neither Party will be liable for any delay or failure in performance under this Agreement deemed as a result, directly or indirectly, of any act of God, acts of civil or military authority, acts of public enemy, terrorism, war, accidents, fires, explosions, earthquakes, floods, failure of public transportation, or any similar or dissimilar cause beyond the reasonable control of either Party. 4. Example broadly defined Force Majeure Clause. Neither party is responsible for any failure to perform its obligations under this Agreement if it is prevented or delayed in performing those obligations by an event of force majeure, including the direct and indirect consequences of said force majeure. Neither Party will be liable for any failure in performance under this Agreement deemed as a result, directly or indirectly of any public emergency, legal restrictions, act of God (whether or not such acts of God have occurred frequently), act of civil or military authority, acts of public enemy, terrorism, war, accidents, fires, explosions, earthquakes, floods, failure of public transportation or communication, viral or bacterial outbreaks, epidemics, pandemics, health related public emergencies, epidemics, pandemics, a national disaster event, large scale disasters, national emergencies, or any similar or dissimilar cause or event beyond the reasonable control of either Party. Where there is an event of force majeure, the party prevented from or delayed in performing its obligations under this Agreement must immediately notify the other party giving full details of the event of force majeure and the reasons for the event of force majeure preventing that party from, or delaying that party in, performing its obligations under this Agreement and that party must use reasonable efforts to mitigate the effect of force majeure upon its performance under the Agreement and to fulfill its obligations under the Agreement. Licensee has no liability for (i) any costs, losses, expenses, damages, or payments otherwise due under this Agreement during an event of force majeure; and (ii) any costs incurred as a result of delays caused by a force majeure event. This Force Majeure Clause is intended to be liberal construed in accordance with the intendment and understanding of the Parties. In view of the current Coronavirus Pandemic, it is essential to add language to the traditional Force Majeure Clauses to include Virus Related Pandemics.
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Contractual Performance in the course of the COVID-19 Pandemic II
Jeffrey R. Schmieler, Esquire It is important to be cognizant of the fact that all persons and entities who are on both ends of a contract have interests in determining and establishing which party should bear the costs of non-performance and that individuals and businesses on both sides of a contract are affected. Virtually everyone is experiencing contracts affected by the pandemic, inclusive of landlords and tenants; business and customers; and vendors and suppliers. Most contracts in existence are being affected including contracts currently being negotiated which may need clauses to excuse performance in the event the pandemic has not ended by a certain date. While the ultimate liability is being determined in courts of law, it may be of more importance for the parties to preserve their contractual and business relationship which was in existence prior to the devastating effect of the Coronavirus pandemic, which will require reasonableness on the part of both parties to the contract. In this respect, the negotiation of a reasonable amicable resolution should be considered and is highly recommended. During the course of negotiations, the reasonableness on the part of both parties will be axiomatic in achieving an amicable resolution of the dispute. Should negotiations not resolve the contractual dispute, then mediation is certainly a worthy consideration for potentially resolving the dispute. This can be done remotely with the selected mediator and all necessary parties and their attorneys. Should the parties not amicably resolve the contractual dispute through good faith negotiation or participation in mediation, then and in that event, the contractual dispute will ultimately result in litigation in which the cases will be highly fact specific and will depend upon the judicial determination of the meaning of the language of the contract and the relationship of the parties. In the event of litigation, the contractual terms and provisions inclusive of (1) Force Majeure clauses; and (2) Material Adverse Effect clauses will ultimately prove to be determinative together with the extra-contractual legal Doctrines of (1) impossibility of performance; (2) impracticability of performance; (3) frustration of purpose, and (4) acts of God. The application of these legal principals in consideration of the specific facts of the case will determine whether the Coronavirus pandemic excuses one party or the other from performing in accordance with the terms of the contract. Even if a contract does not specifically refer to pandemics, the recent Orders from the President, Governors, Mayors effectively shutting down businesses and ordering people to stay at home are likely to trigger force majeure provisions in a contract or the invocation of the doctrines of impossibility or impracticability. The governmental restrictions closing businesses and restricting the freedom of movement may cause contractual performance to be impossible. At present, during the time of the Coronavirus pandemic, contractual performance is exceeding problematic and complex. The ultimate resolution of the legal issues presented, if not resolved by good faith and reasonable actions by the parties to a contractual dispute, will be determined by the legal system. Reasonableness on the part of both parties to a contractual dispute should always be considered as a viable alternative to litigation and a potential adverse judicial determination. INSURANCE COVERAGE FOR COVID-19 CLAIMS
Jeffrey R. Schmieler, Esquire COVID-19 and the Coronavirus Pandemic is inflicting serious economic damages to individuals and businesses in enormous dimensions. These enormous losses, in turn, are resulting in COVID-19 insurance claims and litigation which involve the resolution of the complex insurance coverage issues raised by the Coronavirus losses. The impact of COVID-19 has adversely impacted virtually every individual and business in the United States. Although the insurance industry has initiated a nationwide coordinated effort to suppress corona-virus related claims, there are many Coronavirus claims which are valid claims for insurance coverage under the Property Damage Insurance Policies issued by the Insurance Industry, inclusive of the following:
In the event that you have suffered a loss which is potentially covered, notice of the loss should be provided to the insurance carrier and consideration should be given to filing a claim based upon a careful review and analysis of the coverage granted in the coverage grant provisions of the insurance policy as well as the exclusions and endorsements contained within the policy. Jeffrey R. Schmieler, Esquire
Contractual Performance in the course of the COVID-19 Pandemic The COVID-19 Pandemic is having a direct effect on the legal rights and obligations of individuals and businesses which is nationwide in scope. Parties to commercial and non-commercial contracts must consider regarding the potential applicability of the following defenses, whether they are seeking to enforce a contract or to avoid the enforcement of a contract: Contractual Clauses: All of the terms and provisions of the contract must be carefully analyzed inclusive of but not limited to:
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June 2020
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