Unforeseeable circumstances – such as the outbreak of coronavirus – that prevent a party from fulfilling its contractual duties may fall under the force majeure clause of that contract.
Force majeure clauses are specific to each contract and operate as a risk allocation mechanism to govern situations that are beyond the parties’ control, such as the outbreak of war or natural disasters. Whether the COVID-19 outbreak constitutes a force majeure event depends on the exact wording and scope of the provision in the contract. For example, if the force majeure clause:
- expressly specifies epidemics, diseases or public health emergencies, then COVID-19 likely qualifies as a force majeure event;
- covers “acts of government,” then travel bans may be covered.
The party seeking to invoke force majeure usually must show a causal connection between the event – the outbreak of COVID-19 – that made it effectively impossible to perform its contractual duties. The clause may operate to excuse or suspend performance of a particular contractual duty.
Some companies are providing force majeure notices to their contract partners. The China Council for the Promotion of International Trade announced that it will offer force majeure certificates to help companies deal with overseas contractual requirements. The effectiveness of these certificates and notices will depend on the exact language of the contract’s force majeure clause.
If your contracts do not contain a force majeure clause, then the narrower doctrine of frustration of the contract purpose may apply. To qualify under this doctrine, the event must (1) be not reasonably foreseeable and (2) radically change the contract terms from what the parties agreed to.
Of course, there is no court guidance yet on how the COVID-19 outbreak may affect commercial contracts. The facts are still evolving. But as businesses prepare for the impact of the virus in the United States, they can look to the cases that arose out of past unexpected events like the September 11 terrorist attacks, previous changes in Chinese government policy or unprecedented weather events as a guide to how to deal with key contracts.
View the full Alert on the Duane Morris LLP website.
Infrared forehead thermometers—so-called thermometer guns—are “notoriously unreliable,” according to medical experts quoted in an article in The New York Times, but that hasn’t kept the devices from flying off store shelves as coronavirus cases pop up around the world. Some employers are using them to take workers’ temperatures, then sending the workers home if they have a fever.
Is it legal for employers to take workers’ temperatures? If the Centers for Disease Control and Prevention (CDC) or a state or local health authority proclaims a pandemic has spread in an area, then yes, it is; otherwise, it is not, according to Equal Employment Opportunity Commission (EEOC) guidance.
“Employers are doing the right thing by considering all options potentially available to them in the event of a pandemic, including temperature testing,” said Jonathan Segal, an attorney with Duane Morris in Philadelphia and New York City.
To read the full article, visit the SHRM website.
The ongoing worldwide outbreak of the Coronavirus has led to serious public safety concerns, restrictions, and even bans on international travel. The Coronavirus disease 2019 (COVID-19) is caused by a virus (more specifically, a coronavirus) identified as the source of an outbreak of respiratory illness first detected in Wuhan, China. The disease outbreak has also led to several measures by the U.S. Government to control the entry to the United States of individuals potentially exposed to the virus.
On January 31, 2020, President Trump issued a proclamation suspending and limiting entry into the U.S. as immigrants or nonimmigrants of all individuals who were physically present within the People’s Republic of China, excluding Hong Kong and Macau, during the 14-day period preceding their entry or attempted entry. The proclamation became effective at 5:00 pm (ET) on February 2, 2020.
View the full post by Duane Morris attorney Teodora Purcell on the Duane Morris Immigration Law Blog.
As the deadly coronavirus becomes a global pandemic, companies like Apple and Starbucks have stopped operating in China, and others, like Sony and Amazon, have pulled out of global trade shows like this month’s World Mobile Congress in Barcelona.
The only opportunity for an employee who contracts coronavirus to seek damages outside of workers’ compensation is if their company has behaved recklessly—such as by ordering them to Wuhan, the epi-center of the virus. According to Jonathan Segal, a partner at the law firm Duane Morris, the fact the U.S. State Department has issued a Level 4 advisory for China—a flat-out “do not travel” warning—means firms could face special liability in the event their employees contracted the virus.
“There’s the legal answer but, from a practical management point of view, you don’t want to force people who are scared into doing something,” says Neuberger.
Segal echoed this sentiment, saying “it’s a horrible message to the workforce” to order employees to travel when they are fearful of a pandemic.
To read the full text of this article, please visit the Fortune website.