What Triggers a Force Majeure Provision and Excuses Performance?
According to Merriam-Webster, “force majeure” translates from French as “superior force.” In contracting terms, a “force majeure” clause is an often overlooked provision containing boilerplate language that will very rarely ever be triggered. The clause is intended to allow a party to be relieved of contractual obligations when unforeseen events beyond that party’s control make it impossible or impracticable for the party to perform.
Most health plan contracts with providers or vendors contain a force majeure clause. Whether and/or to what extent a particular force majeure clause will be impacted by the COVID-19 pandemic will depend on the specific language of each clause. The following items commonly appear in force majeure clauses and may be implicated by the events related to COVID-19:
- Pandemic, epidemic, or disease
- National or State emergency
- Government acts, regulations, mandates, or orders
- Shortage of materials and/or resources
- Disruption of transportation systems
- Labor stoppage
Additionally, many force majeure clauses have catch-all language such as “any other event beyond the reasonable control of a party.” Thus, an event may be deemed a force majeure event even if it is not specifically listed in the contract itself.
It is important to note that the fact of the current pandemic, in and of itself, does not necessarily trigger a force majeure clause. The party seeking to be excused from performance would need to demonstrate the degree to which the party’s ability to perform is impacted by the pandemic. In many cases, the contract language will determine the circumstances under which performance will be excused. Some language may prescribe that a party may be excused if a triggering event fully “prevents” performance whereas others may be less strict, merely requiring that performance be “impeded” by the triggering event.