COVID-19 now controls our day-to-day, but it may not control our existing contracts. To know the extent of its reach on construction projects, it’s important to touch on how delay is handled under contract law and specifically the role of force majeure.
What is Force Majeure?
An unforeseen, uncontrollable event. Force majeure is an event or effect that can be neither anticipated nor controlled by parties in a contract; an unexpected event, including acts of nature and of other people, which prevents a party from performing its contractual duties.
Why does Force Majeure matter?
It can excuse nonperformance of a contract. Force Majeure is an excuse for nonperformance or untimely performance of a contractual duty, such as constructing a building. General contract law excuses nonperformance only when the contractual duty becomes impossible or “commercially impracticable,” frustrating the basic purpose of the contract by no fault of the party seeking relief—a very high bar¹. A force majeure contract term, however, overcomes that rule and provides an excuse to nonperformance or delayed performance. But in most construction contracts it doesn’t terminate the duty to perform the contract, it only delays it.