What impact will force majeure or other change clauses have on my contract obligations?

A force majeure or other change clauses may free parties in a contract from their liabilities when an “extraordinary event” or “act of God” prevents them from fulfilling their obligations.

It depends on the contract and whether such a clause is included. Review each contract to determine whether there are clear, comprehensive and adequate protections for your company and whether “epidemic” or “pandemic” or “public health emergency” are included. Courts often interpret the clause based on what is specifically listed. Then consider whether your project has, in fact, been affected by the pandemic, e.g. labor or equipment shortages; is there a schedule impact?

For companies that have force majeure clauses in their standard contracts, it would be wise to review those provisions to make sure they provide clear, comprehensive, and adequate protections for the company and consider whether terms such as “widespread epidemic,” “pandemic,” and/or “public health emergency” should be added to their force majeure clauses in light of the threat posed by the current coronavirus outbreak, as often courts will interpret the clause based on what is specifically listed in the contract.

In a recent ABC webinar, attorneys from the legal firm Bradley recently recommended these five important points when it comes to force majeure clauses:

1. Any particular issue that might arise on a particular job is very, very specific to that project. What may apply to project A may not apply to project B. You need to look at the specific facts on a specific job.
2. Course of action is very dependent upon specific contract language and specific facts.
3. What a legal team and client might decide to do on a particular project is very dependent upon the applicable law. It could be a very different outcome from one jurisdiction to the next.
4. The situation we’re dealing with is unprecedented in recent history in the United States. As a result, there could be not laws enacted or new interpretations of existing laws in courts later as some of these issues are, are addressed in courts.
5. Document everything. Everyone is operating in a fog, but the fog will lift and that’s when everything will be dependent on facts of what occurred.

This does not constitute legal advice. Consult an ABC attorney for more details. ABC members are entitled to a free call for legal education on a specific issue and are not limited by the number of issues they can call about. Contact ABC of Wisconsin at 608-244-5883 or 800-236-2224 and chapter staff will help you determine if a free legal call is necessary and which attorney can best answer your question.