Lessons on Force Majeure Application from Past Crises

Law360

Robert M. Travisano, Member of the Firm, and Robert Lufrano, Associate, in the Litigation & Business Disputes practice, in the firm’s Newark and Princeton offices, respectively, co-authored an article in Law360, titled “Lessons on Force Majeure Application from Past Crises.” (Read the full version – subscription required.)

Following is an excerpt:

As the world copes with the effects of the COVID-19 pandemic, prior crises can and should color our current outlook, particularly from a legal standpoint.

The predictable and settling thing about the law is that despite what seemingly novel issues arise, lawyers and litigants can turn to precedent to frame their approach to the here and now.

While none of the current circumstances has ever been experienced before (or at least not in recent memory or to this degree), similar cataclysmic disruptions from the past may be prologue and provide needed guidance for how we handle present-day legal issues.

In the business dispute context, for example, consider the application of the force majeure clause. Such clauses can excuse performance of contractual obligations due to some event “or effect that can be neither anticipated nor controlled.”

But how will such clauses be interpreted in the context of nonperformance occasioned by the pandemic and its offshoot issues?

In the current environment contractual nonperformance may result from health-related causes, government reaction to those health-related issues, the economic downturn occasioned by the two or a hybrid of all three.

We can look to the application of the force majeure concept to the 9/11 terrorist attacks and the 2008 Great Recession to gauge how these principles might be applied to COVID-19-related nonperformance.