Bernie, Coronavirus and Force Majeure
Back from Japan and having settled his software contract with Sakura, Bernie is back in business!
He just signed a big contract with an American company (with affiliates in Europe) for his “Hit Maker” software.
By the end of March, the client is expecting Bernie and his team to meet with their European team in Brussels to work on the software implementation.
But Belgium now has a large number of cases of coronavirus! Bernie doesn’t want to travel to Brussels and risk his team catching the virus or getting stuck there. But, if he doesn’t go to Brussels to start the implementation, he must pay penalties for the delays. Could this coronavirus be an event of force majeure? He thinks there is something in his contract about this…
Bernie reads his contract which says: Neither party shall be liable for its performance under this Agreement in the event of any Acts of God or force of nature events or circumstances beyond its reasonable control.
Bernie, force majeure events are acts, circumstances or events beyond the reasonable control of the party concerned as defined in your contract. A force majeure clause in your contract may allow you to suspend or stop service without being in breach.
For coronavirus to be an act of force majeure your contract should specify that epidemics, diseases or viruses are force majeure events. Unfortunately, these events are missing in your contract!
You could try to rely under the general language in the force majeure clause such as ‘circumstances beyond its reasonable control’ However you have to prove that the event was unforeseeable at the time of contracting and it has stopped you from performing under the contract (not just made it more difficult).
But Bernie, if the government stops all travel to Brussels under law or a decree, then you could rely on this as an act for force majeure. Only a recommendation on not travelling to Brussels for non-essential business may not be enough… This doesn’t stop you from performing, it just makes it more difficult.