Force majeure clauses provide coronavirus relief for business

Author: Karry Lai | Published: 13 Feb 2020

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From manufacturing delays to store closures, the impact of the coronavirus has rattled China and all supply chains connected to the country. Many businesses are affected, faced with delays or the failure to fulfil contractual obligations. To date, Chinese buyers of copper and liquefied natural gas have declared force majeure.

While force majeure clauses may be relied upon – the Chinese government is encouraging their use – lawyers warn that they may not have been negotiated properly into agreements.

Force majeure clauses

The force majeure clause is a typical legal contract provision that addresses the unpredictable changes that can affect a contract. It can relieve parties from performing their contractual obligations when certain and specific circumstances beyond their control occur, making the contract’s performance either inadvisable, commercially impracticable, illegal, or impossible.

If there is a force majeure clause in the...