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Force majeure provisions in light of COVID-19

With the COVID-19 pandemic prompting myriad business closures, many suppliers and their customers are reviewing the force majeure provisions within their supply chain contracts. Force majeure, which translates to “superior force,” recognizes that an event that’s outside anyone’s control and unavoidable—such as a natural disaster—can make it impossible for a party to fulfill its obligations under a contract. Perhaps not surprisingly, the clause is sometimes called an “act of God” provision.

According to a recent article in The National Law Review, written by attorneys with Greenberg Traurig LLP,[1] “a force majeure clause is a contract provision that excuses a party’s performance of its obligations under a contract when certain circumstances beyond their control arise, making performance inadvisable, commercially impracticable, illegal, or impossible.”

While not all contracts between suppliers and their customers include these provisions, they “are common enough to warrant the attention of every prudent supplier’s or customer’s lawyer,” said Peter Biagetti, attorney with Mintz in Boston, Massachusetts, USA.

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