The outbreak of the corona virus has raised a number of issues related to contractual performance obligations. An excuse for not fulfilling contractual obligations may be in the form of a “Force Majeure” or “G ‑ d Law” provision.
Force majeure provisions usually excuse the non-fulfillment of events such as natural disasters and wars. While some force majeure clauses specifically include epidemics and pandemics, others do not. Depending on the breadth of the clause in question and the jurisdiction that governs the applicable contract, Coronavirus may be considered a force majeure event.
As a rule, a force majeure provision excuses the contractual default if the default is caused by unforeseen events beyond the control of either party and the performance is economically impractical or inappropriate. In addition, there must be a causal link between the force majeure event and the non-performance by the affected party. Adequate efforts may also be required to mitigate the effects of the force majeure event.
If your contract does not contain a force majeure provision, non-performance may still be excused. For example, if the main purpose of the contract has been frustrated or made impossible.
Timely notification of the use of a force majeure provision may be required. In the event that a contractual provision on force majeure applies, the person concerned may possibly be released from his performance obligations while the event of force majeure continues. Termination of the contract is also a possible option, depending on a number of factors, including but not limited to the period during which the force majeure event continues.
Takeaway: Given these unprecedented circumstances, it may be necessary to talk to marketing partners about relying on contractual non-performance considerations. Marketers should review the underlying marketing contracts with an experienced lawyer to determine if there is a force majeure provision or other excuse for non-performance. The scope of such a provision should be assessed as well as the requirements for damage limitation, notification, termination and choice of law.
Richard B. Newman is a Attorney for digital advertising practices and FTC lawyer at Hinch Newman LLP. Follow him on Twitter @ FTC’s lawyer.
For informational purposes only. No legal advice. Can be viewed as a solicitor’s advertisement.
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