Force Majeure, Commercial Impracticability, and Frustration of Purpose
The outbreak of COVID-19 has been one of the most disruptive events to the global economy in recent memory. Businesses across every sector of the economy are scrambling to determine the legal repercussions of government travel restrictions, labor shortages, supply chain interruptions, financing impacts, and market price fluctuations triggered by the pandemic. How can I possibly be expected to perform my maintenance contract if the government orders me to stay home? Am I still liable for liquidated damages if I don’t meet the contractual milestones in my construction schedule? Do I still have to pay my purchase orders for kitchen supplies and foodstuffs if the government has shut down all restaurants indefinitely? These, and other questions like it, loom large in the wake of the current pandemic.
With this survey, we attempt to shed some light on the answers to these questions and educate readers about the history and status of what we call “legal excusability” in the United States, the District of Columbia, and the US Territories. When we say “legal excusability,” we specifically refer to situations where intervening events delay or outright prevent one party from performing its obligations under a contract. In American jurisprudence, the law of excusability is derived from three authorities—the language of contracts, the common law, and legislative provisions excusing performance. Attorneys from Seyfarth Shaw’s commercial litigation, construction, and government contracts practice groups have undertaken a comprehensive review of these concepts in every American jurisdiction, analyzed what we found, and summarized our findings in the pages below. While we certainly don’t claim to have all the answers to the difficult questions that businesses face during these trying times, our goal is to provide the legal building blocks to aid contractors that may have a viable claim of legal excusability. We hope you find it informative.