My colleagues and I in Baker McKenzie's disputes practice have been fielding a steady stream of questions from clients regarding the effect of COVID-19 on their contractual relationships. Industry media outlets around the world must be getting the same questions, because we have been interviewed by a number of publications about legal principles like force majeure and how those doctrines might apply in these uncertain times--like this Eastern European media outlet, The Financial.
“COVID-19 is causing business disruption all over the world, and many companies are evaluating whether they can postpone, suspend, or cancel their contractual obligations because of it. But force majeure protection does not automatically apply just because of a worldwide pandemic,” says Jennifer Ancona Semko, Baker & McKenzie LLP. “Instead, the company has to evaluate the language of the force majeure provision in its contract, consider the applicable law, and determine whether COVID-19 has made its performance truly impossible. Under the laws of most US states, a company cannot escape its obligations just because the contract has become less profitable or more difficult to honor. And the laws of most US states also require a company to try to perform through some other means before it can claim the protection of force majeure”, she told The FINANCIAL.