The Corona Virus Pandemic: Analysis of Force Majeure

The invocation of force majeure is an extreme measure, the last time the United States faced large scale force majeure disputes was the terrorist attacks on September 11^th, 2001 and Hurricane Katrina in 2005. Contractors will notice that many of the force majeure clauses in their respective contracts contain a “terrorist attack” provision, before 9/11, this was not the status quo. The Pandemic is an event that has such a large scale impact on New York, the United States and the World, that force majeure law will likely change, throughout the World, forever. Whether in a private or public context, there will be billions to trillions of dollars at stake from disputes stemming from force majeure being claimed throughout the World in the years to come.

Assuming your contract contains a force majeure clause in the first place, the burden of proving that force majeure applies to excuse performance is placed on the party claiming that it cannot perform under the contract due to the Pandemic; even worse, under Kel Kim Corp. v. Cent. Markets, Inc., 70 N.Y.2d 900, 902–03, 519 N.E.2d 295, 296–97 (1987), the New York Court of Appeals has held that the contract’s respective force majeure clause can only be invoked to excuse performance if the event is explicitly referenced in the contract’s force majeure clause. Of course, whether a contractor will succeed in invoking force majeure will also depend on whether the respective force majeure clause is narrow or broad.

For example, invocation of force majeure is an extreme measure, so force majeure clauses may be narrow, especially in a public works contract, in the sense that it will highlight specific instances that excuse performance such as extreme weather, an earthquake, war or a terrorist attack, to name  a few. You’d have to review your contract to determine if  sickness, virus, pandemic or any variation thereof will be referenced in your respective force majeure clause.

Conclusion

It is absolutely essential for contractors to review their respective force majeure clauses. Reliable legal advice from experienced construction litigators can help contractors avoid these potential pitfalls and exposure to liability stemming from the Pandemic. As always, Welby, Brady & Greenblatt, LLP remains available to answer questions you may have as the legal landscape evolves during this Pandemic.  

If you would like more information regarding this topic please contact Michael E. Greenblatt at mgreenblatt@wbgllp.com or call (914) 607-6420