The CoronaVirus and the cancellations of Agreements – Force Majeure? | Lior Pick & Co. Law Office

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The CoronaVirus and the cancellations of Agreements – Force Majeure?

March 14, 2020

Force Majeure is a common clause in a contract. Many agreements include a Force Majeure clause which can, in some specific cases, cancel or postpone one party’s commitment under the pretext that there were unforeseeable circumstances that caused him to violate the agreement. Most Force Majeure clauses exempt from liability in cases of war, hostilities, earthquakes, strikes on the economy, etc. Of course, each clause is relevant to the specific agreement, for example, a contractor may add a term related to a national shortage of building materials.

It is important to note that examining court’s position in this matter shows that the court will not easily allow a party to a binding agreement not to fulfill his obligations even if a case of Force Majeure occurred. The court will carefully examine whether the circumstances which caused the breach of the agreement could be expected.

With regard to the CoronaVirus, the Ministry of Health has determined, that there are no mass events and congregations in which more than 10 people attend.

Therefore, we saw cancellation of events planned around the country.

Event organizers, and other professionals who provide their services for these events have actually been notified of canceling these events.

Who will absorb the economic damages resulting from these cancellations?

A Force Majeure clause may cancel one or more obligation. The situation will be examined first of all with one question – whether the situation could have been expected in advance and whether that Force Majeure situation actually prevented the existence of the contractual obligation.

Each agreement must be examined separately by examining and understanding the party’s obligations and intentions and by examining the Force Majeure clause.

The Force Majeure clause is very important and should be drafted very carefully.

Please note that the courts have not yet decided on the matter of Force Majeure regarding the CoronaVirus but there is no doubt that in the near future the courts will be required to express their opinion in this matter.

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