Each contract represents the “will” of the contracting parties. This is a golden rule in contracts law. Moreover, valid contracts are always enforceable by law. However, in certain events, a party or the parties may not be able to meet their obligations due to the occurrence of uncontrollable and out-of-hand events. Such uncontrollable and unforeseen events could be classified as “Force Majeure” which could lead to the termination of the contract. Force Majeure events, among other things, are acts of God, natural catastrophes, earthquakes, tsunami floods, war and hostilities, intervention of Governments, epidemics and spread of diseases …, etc.
At present, as the imminent threat of coronavirus is increasing, therefore there is high possibility that coronavirus will affect many contracts, local or global. It would be advisable to think about the potential impact of such grave disease. Already, The World Health Organization (WHO) declared the Coronavirus outbreak a pandemic. This is an unforeseen uncontrollable event, which may affect performance of contractual obligations. In other words, could be taken as force majeure event.
Better we all make sure we have an appropriate clear clause in the contract to cover force majeure events, in a way to give the right of termination for inability to perform. Depending on the merits of each case \ transaction, the contracting parties should ensure that they are comfortable with the terms of their contracts in case coronavirus is deemed force majeure event. By all means, it is important for the contracting parties to understand the circumstances under which they can declare an event as force majeure, so they can be in a better position to negotiate the best terms possible to end this scenario. Also, better for the contracting parties to check and review the notification process and deadlines in the clauses to ensure that they are not missing an essential contractual right that could affect their ability to claim force majeure. Make sure of what you can do, what you will not be able to do and why?
In such difficult times, it would be prudent to exercise much reasonable diligence. This can help in minimizing loses and achieving better end results. As a rule, while negotiating and drafting contracts, it would be advisable to take even some remote events in consideration and to finalize the contract accordingly. Better for all.
