Business Disruption and Contract Non-Performance Analysis

This document is a client alert that discusses the implications of COVID-19 on contract performance and the applicability of force majeure clauses. It outlines five steps for evaluating the efficacy of these clauses in the context of a pandemic. The first step emphasizes the importance of understanding the specific wording of the force majeure clause in the contract, as variations can significantly impact its interpretation. The second step involves determining the cause of the disruption, whether it is directly related to the pandemic or influenced by other factors. The third step addresses the governing law, highlighting that different jurisdictions may interpret force majeure clauses differently. The fourth step focuses on the necessary precautions businesses should take to protect their interests, including documentation and communication strategies. Finally, the fifth step examines the rights of the parties involved, considering the potential for legal action or alternative dispute resolution methods. This alert serves as a preliminary guide for businesses navigating contract disputes arising from the pandemic.