JASON RESNICK | WG VICE PRESIDENT AND GENERAL COUNSEL AGRICULTURE & THE LAW
You’re Excused! Force Majeure Clauses May (or May Not) Void a Contract Most commercial contracts have a force majeure clause. This little-used provision generally allows a party to escape their obligations under the agreement if performance under the agreement is stymied due to an “Act of God” or other unforeseeable event. During the coronavirus pandemic, many produce agreements have been terminated. But the pandemic is not a universal “get out of contract” card. It is anticipated that legal disputes will test the bounds of these clauses and boilerplate “Act of God” clauses will be supplemented with the now foreseeable pandemic as a force majeure event. Pandemic: Force Majeur de Jure
and commerce that have made it near impossible to make good on their contractual obligations. As restaurants, hotels, college dining halls and other meal providers have shuttered or scaled back purchases due to the coronavirus pandemic, growers and shippers who supply foodservice have gotten hammered as once lucrative produce
The force majeure terms in many contracts are boilerplate and never contemplated a global catastrophe such as COVID- 19, the disease that has killed more than 62,000 Americans as of this writing. Many companies have seen business come to a standstill as the result of state-imposed restrictions on travel
contracts have been voided by buyers, who, in turn, have lost their customers. Industry meetings and trade shows have been cancelled due to government shutdown orders and travel bans. But as with all agreements, we must look first to the contract language to determine if the force majeure clause will stick. A typical force majeure clause provides that performance under the agreement is excused if performance is prevented or delayed by any “Act of God” or “other cause beyond the reasonable control of the parties including, floods, storm, fire, strikes, war, interruption of power, or by any law or regulation.” But if the clause is too narrowly drafted, courts may construe the contract to excuse performance only if one of the specified conditions are satisfied. The coronavirus pandemic has become a worldwide force majeure event. But it is not a given that the pandemic constitutes an “Act of God.” Courts will
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MAY | JUNE 2020
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