Answering questions about contracts and 'force majeure' in the age of coronavirus

When New York’s Metropolitan Opera was facing financial difficulties earlier this year, the opera’s management decided to lay off all its union employees for the length of time that the opera would have to stay closed as a result of the coronavirus crisis. The opera cited the “force majeure” clauses in the various union contracts for the performers as the justification for its actions. What exactly is “force majeure” and how does it impact other companies and their contracts, including insurance contracts?

To help lawyers and their clients answer this and other questions, ALM’s Law Journal Press announced the launch of a new ebook explaining the topic and the enforceability of contracts as a result of COVID-19.

“COVID-19 as a Trigger for Force Majeure: A Global Survey” is a collaboration between ALM editors and McDermott Will & Emery lawyers Lisa Richman, Shawn Helms, Jason Krieser and Matthew Cin. The authors developed the survey as a simple Q&A that allows companies and legal professionals to quickly access guidance for key questions across multiple jurisdictions, including globally. The ALM team designed the title to ensure easy access to answers as well as to the precedent underlying the guidance.

The publication, online and in ebook format, covers 10 countries and 16 U.S. jurisdictions, including California, New York, Illinois, Florida, Georgia, Pennsylvania, Massachusetts, New Jersey, Texas and Washington, D.C. The international sections help readers assess contractual obligations in Belgium, Canada, China, Germany, France, India, Italy, Japan, Mexico and the United Kingdom.

Each state and country covered in the book addresses a set of consistent questions, allowing lawyers, company executives, and insurers to compare answers across jurisdictions. The questions are:

1. How does COVID-19 affect contractual obligations?
2. How are force majeure provisions interpreted in the relevant jurisdiction? Is there a key case that should be considered?
3. What type of events qualify as force majeure in that jurisdiction? Under what circumstances will an event not expressly described be considered a qualifying event?
4. Do courts there construe force majeure clauses broadly or narrowly and on what basis?
5. What steps should you take if you think force majeure might apply to your contracts?
6. Other than force majeure provisions in a contract, are there additional pathways in that jurisdiction for a contracting party to suspend or terminate performance without breaching the contract (e.g., doctrines of impossibility, impracticability, frustration of purpose)?
7. Are there additional contract provisions or principles that a party can leverage as a pathway to excuse its lack of performance in that jurisdiction?
8. What should you do if you receive a force majeure notice?
9. Are there additional remedies for the counterparty (for example, step-in rights, right to cover, increased compensation, the ability to terminate or suspend performance in full or in part)?

The ebook can be purchased at Law Journal Press.

To read the press release, visit ALM’s Press Room.

Related: Do your contracts protect you from the coronavirus?