Special Corona Virus Threat Assessment for Contract Drafting

If you check out the boilerplate language in your contract form, you’ll likely find a paragraph commonly known as the “force majeure” clause.  That’s the clause that addresses occurrences that are considered to be beyond the parties’ control like acts of war, natural disasters, or strikes.  It’s one of those sections that we include in the document, but often don’t focus on because…well, let’s face it…what are the chances of a revolution?

The last time I recall anyone giving serious thought to the content of these clauses was after 9/11. When the Twin Towers were struck, the legal world started focusing on those force majeure clauses because a lot of the standard language didn’t have a direct reference to disruptions caused by terrorism. But after 9/11 anyone who wasn’t already referencing terrorism in their force majeure clauses made sure to add it. Well, the corona virus is giving us a reason to focus on this paragraph again. And, obviously, instead of tweaking these paragraphs to account for terrorism we now need to account for epidemics and disease.

These changes are necessary because the ability of a client to perform pursuant to an agreement could be impacted or precluded because of some complication stemming from the corona virus.  What if they are ordered to be quarantined, or their office is closed because of disease?  They could be unable to travel, or travel to a particular area could be suspended. There are a variety of ways that your client could be prevented from performing, and if they don’t have a legal “out” they could be in trouble.  

Your client might not be completely exposed right now— while your existing clause might not reference disease specifically, you likely do have some catch-all provision like “other unforeseen circumstances.” That might be enough to hang your hat on and the language could protect the client if the matter is litigated.  But that’s a bit uncertain, and you know how fickle judges and juries could be. Certainty is often the wiser approach, so it’s probably a good idea to add more specific language to your agreements now.

Of course, even if you make this change to your form it’s not going to have any effect on existing contracts that have already been executed by the client and are currently in effect. But you can include the change in everything you draft going forward. 

Not only is this a “best practice” move, but it’s also an ethical consideration. This is about competence. Our duty of competence under Rule 1.1 is a continuing duty and Comment [8] explains that “to maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice…” This is a change in the law that you need to consider.