COVID-19 Relief Law - Force Majeure
Standard to contracts, but infrequently invoked, is the Force Majeure clause. The Force Majeure, known as an "act of god" clause outlines specific circumstances or events that relieve a party from its contractual duties otherwise required.
An effectively drafted Force Majeure clause allows for a limitation of damages when an event beyond the control of the parties interferes with the performance of the contract. A Force Majeure clause can be as strictly or broadly construed as the parties see fit. However, in Team Mktg. USA Corp. v. Power Pact, LLC, 41 A.D.3d 939, 943, 839 N.Y.S.2d 242, 246 (3rd Dept. 2007), New York courts have held the extent of a "catch-all" phrase such as "without limitation", is to be limited to the specifically enumerated categories. Further, New York courts have held the exclusion of certain events, or failure to include them, will hold the breaching party liable even in the event of their occurrence. Id.
As many businesses are faced with the COVID-19 crisis, it is crucial to consult with an attorney to best inform your decisions before attempting to effectuate or invoke a Force Majeure clause.
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