Force Majeure Or An Act of God
A force majeure provision or an “act of God” provision addresses circumstances where a party may terminate their contractual obligation without liability in case of major unforeseen events. In contracts where there is a force majeure provision, the relief of obligation depends on what is expressly provided. Given that this is a contractual term, the Court will narrowly construe the force majeure clauses. If there is no specific force majeure provision in your Contract, in California, the ‘act of God’ defense is codified in California Civil Code § 1511.
California Courts law will not require the parties to perform an impossible task. “A condition in a contract, the fulfillment of which is impossible or unlawful, within the meaning of the Article on the Object of Contracts, or which is repugnant to the nature of the interest created by the contract, is void.” (Cal. C. Code § 1441)
NOTICE REQUIREMENT: One aspect of the force majeure clauses and California Civil Code § 1511 is the notice requirement. It is vital to give timely notice of the force majeure ‘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’.
Prior to giving notice you should:
1. Review your contracts in order to ascertain the existence of a force majeure clause and any associated remedies or rights.
2. Keep in mind that the receiving party may treat the notice as repudiation or a complete breach. Thus, the notice should be communicated specifically to address any delays or difficulties in performance vs. a complete inability to perform.
3. Your nonperformance must be as a direct and proximate cause of the Coronavirus pandemic.
(a) A tenant who is forced to close down their business due to COVID-19 orders may have a right to abate rent during some or all of the closure.
(b) A construction company’s performance maybe affected as a result of COVID-19 causing delays in its initial projected timelines.
Need help? Schedule a video consultation by clicking here.