APPLICATION OF FORCE MAJEURE IN CONTRACTS.
As a result of the Covid-19 pandemic as declared by World Health Organisation (WHO) on 11th March 2020, many contract obligations will not be performed and others would be delayed. The way out by which contracting parties can escape liability arising from non-performance is if a force majeure clause was inserted under their terms of contract. As discussed above a successful application is based on strict interpretation. So if it was not inserted in the terms of contract parties cannot rely on it. The other way out will be by relying on the doctrine of frustration which is subjective in interpretation. So in scenarios like Covid -19 pandemic, the force majeure clause would be a determining factor in helping contracting parties delay performance or escape liability for-non-performance. Post covid-19, it would be legally unwise to draft a contract agreement without including a force majeure clause. Also it would be unwise to be restrictive in construction of a force majeure clause. A good lawyer will have to include as many events as possible and also add a catch-all provision to cover unforeseeable crises.
Read The Introduction Of Force Majuere
SAMPLE DRAFT OF A FORCE MAJEURE CLAUSE
“Notwithstanding anything contained in this Agreement parties shall not be liable for failure to fulfill any of its respective obligations, if such failure is due to a force majeure event.
Where the force majeure event occurs which prevents any of the parties from performing its respective obligations under this Agreement, within the prescribed time, the time stipulated in the Agreement for the performance of such Obligation shall be extended for the same length of time for which the force majeure event subsists or by four (4) months whichever is higher.
- Provided that Parties shall in writing notify each other of the force majeure event and after the abatement of the force majeure agree in writing of a new date which shall only be an extension of the time stipulated in the Agreement for the performance of such obligation by the same length of time for which the force majeure event subsists or by four (4) months whichever is higher.
- For the purpose of this agreement, a force majeure event shall mean the occurrence of any one or more of the following events:
- Acts of God or events beyond the reasonable control of the parties which could not reasonably have been expected to occur.
- An act of war (whether declared or undeclared), invasion, armed conflicts or acts of foreign enemy, riots, insurrections, terrorists or military action, civil commotions, pandemic, epidemic, which prevents the parties from carrying out their respective obligations under this Agreement”.
The covid-19 pandemic has brought on a new reality across all sectors especially in the world of commerce, let us be abreast of these changes and realities. Going forward it is advised that parties to a contract always seek the services of a lawyer to help them avoid contractual pitfalls by reviewing their contracts and finding means to mitigate consequences of delayed performance or non-performance that is not of their making.
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