As substantial disruptions whipsaw the public and private sectors in the wake of the COVID-19 outbreak, many are rightly concerned about the effects of these disruptions on a variety of contracts, including real estate leases. A number of these concerns revolve around the force majeure clause, which generally excuses performance due to an event beyond the parties' control. In New York and Connecticut, there are important lessons for clients to glean from the instances in which courts have addressed these clauses, some of which arise in leasing, but many of which arise in other commercial contracts. Many of these lessons are fact-specific, so this alert is meant for general guidance, not an assessment of any particular circumstances. We are happy to assist in connection with any particular problems your business may be experiencing.
Common Lessons
- Parties are not excused from performing under force majeure clauses when they create their own inability to perform.
- Government actions beyond the parties' control may be force majeure events.
- Remedies under a force majeure clause may be limited by the clause's language and the specific force majeure event.
- The question of whether an event is sufficiently severe to constitute a force majeure event is beyond the reach of a motion at the pleadings stage.
New York Notes
- Courts have narrowly construed force majeure clauses. For example, if a force majeure clause is very specific as to the type of events included, other events would be excluded.
- A party cannot profit from a force majeure event.
- Force majeure does not apply absent a force majeure clause in the contract.
Connecticut Notes
- Illness may constitute a force majeure event.
- Force majeure clauses may require notice.
- Force majeure clauses may trigger liquidated damages.
- Force majeure clauses may preclude the specific type of relief sought.
- Don't rush to Court absent a demand for relief.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.