We often read the clause ‘Force Majeure’ in the project contract but really never bother to understand it. But in view of the current Coronavirus situation Force Majeure clause can play important role. I am a Project Management professional but not an expert on this subject but sharing two articles and highlights from the article.
What is Force Majeure as per the law?
Its unforeseeable circumstances that prevent someone from fulfilling a contract.
Few important highlights,
- The World Health Organization (“WHO”) declared COVID-19 a pandemic and governments imposed unprecedented travel, movement, and large-gathering restrictions
- The coronavirus pandemic has impacted the ability of businesses around the globe to maintain operations and fulfill existing contractual obligations.
- The applicability of a force majeure provision is contract-specific, and there is a high bar for invocation of such a clause.
- The implementation of travel, movement, and large-gathering restrictions, have altered the force majeure landscape in a manner that may impact the availability of such provisions to nonperforming parties.
- The “test” for force majeure usually requires the satisfaction of three distinct criteria:
- the event must be beyond the reasonable control of the affected party;
- the affected party’s ability to perform its obligations under the contract must have been prevented, impeded or hindered by the event; and
- the affected party must have taken all reasonable steps to seek to avoid or mitigate the event or its consequences.