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Applicability of the “Force Majeure” Doctrine on Contract Performance

The rapid spread of the Coronavirus (COVID-19) has caused significant disruption to our personal lives, professional lives, and business operations across California and the world. Many individuals and businesses are already encountering contract disputes in which a party’s nonperformance of otherwise binding contractual obligations may be excused under the “Force Majeure,” “Act of God,” “Impossibility” or “Impracticability” doctrines. While each of these doctrines are separate and distinct from one another, they are related.

In California, California Civil Code §1511, provides,

The want of performance of an obligation, or of an offer of performance, in whole or in part, or any delay therein, is excused by the following causes, to the extent to which they operate:

1. When such performance or offer is prevented or delayed by the act of the creditor, or by the operation of law, even though there may have been a stipulation that this shall not be an excuse; however, the parties may expressly require in a contract that the party relying on the provisions of this paragraph give written notice to the other party or parties, within a reasonable time after the occurrence of the event excusing performance, of an intention to claim an extension of time or of an intention to bring suit or of any other similar or related intent, provided the requirement of such notice is reasonable and just;

2. When it is prevented or delayed by an irresistible, superhuman cause, or by the act of public enemies of this state or of the United States, unless the parties have expressly agreed to the contrary; . . .

Similarly, California Civil Code §3526 of provides: “No man is responsible for that which no man can control.”

The application of these doctrines to your contract dispute may justify nonperformance or an excuse for performance of the contract. The language of force majeure clauses varies from contract to contract, however, and whether the COVID-19 outbreak qualifies as a force majeure event under the terms of an agreement will depend on the facts relative to the case and/or the exact language of the provision in question. In fact, where the force majeure language in an agreement would not cover the COVID-19 outbreak as it currently stands, a party that chooses to cease or modify its performance under the contract risks inadvertently repudiating or breaching the contract.

If you are facing a contractual dispute due to the Coronavirus (COVID-19) pandemic, please contact our office. We at Purdy & Bailey are experienced in a wide range of corporate litigation strategies. Whether you need assistance in drafting, reviewing, or enforcing business contracts, we have the skills and resources you need to secure a fair result. Let our business litigation and business dispute attorneys team get to work for you.

Call us today at (858) 360-7080 to request a courtesy evaluation with one of our lawyers.

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