Force Majeure Clauses In Construction Contracts In the Aftermath of COVID-19

Not long ago, force majeure clauses were often afterthoughts in construction contracts, referring in various ways to potential, unforeseeable and uncontrollable catastrophes, each in one mind's eye as unlikely to then happen as not. After the fact, parties attempted to shoehorn this untested defense to have it apply to a wide range of events — natural and some unnatural. Then came 2020, and with it a new opportunity to put forward a fresh spin on the traditional "force majeure" concept as COVID-19, along with the attendant governmental shutdowns and other actions, brought havoc and uncertainty to the industry. We are only beginning to scratch the surface of the effect on the construction litigation visited on us by COVID-19-related impacts. However, the pandemic and its continuing impact has reinforced the importance of planning for the unexpected — and undefined — when negotiating construction contracts, perhaps even where there is no express force majeure clause to which to point.

Origins of Force Majeure

Force majeure, and related common law doctrines, trace back to Roman law, which used the term vis major, and held "possibility" to be the limit of all obligations. By 1883, the U.S. Supreme Court adopted force majeure principles when, in The Tornado, 18 U.S. 342, it absolved the owner of a cargo ship from its contractual obligation to deliver freight after the ship was rendered unseaworthy by accidental fire. Though these principles were initially read into contracts that did not explicitly contain "force majeure" clauses, eventually parties began incorporating specific provisions in their agreements in an effort to control the bases for and consequences of excusing performance in certain situations. We are at that point again.

Early Epidemic-Related Application

The COVID-19 pandemic is new, but wars, floods and even other epidemics have impacted contracts over the years. While there may be other incidents, it would appear cases going back to the 1800s refer to contracting parties' requests to be excused from performance due to widespread disease. In reaching their conclusions, courts generally considered these past epidemics to excuse performance as a matter of equity. See, e.g., Sumner v. Philadelphia, 23 F. Cas. 392, 397 (3d Cir. 1873) (finding "disease must … be viewed in law as the act of God" and holding the city of Philadelphia liable for equitable damages due to compulsory quarantine of a cargo ship infected with yellow fever).