Act of God in Business Law

29 Sep Act of God in Business Law

If you`re reading this, dealing with COVID and its impact on daily life and business is probably one of the main reasons you`re here. The truth is that depending on your situation, COVID is not always considered a case of force majeure and/or your insurance may not always cover it. Roy Banerjee helps defend, settle and pursue claims to protect your business interests. He is an accomplished litigator specializing in the effective handling of real estate and commercial matters. Due to the COVID-19 pandemic, the force majeure clause in contracts and business transactions has regained popularity. Many contracts contain provisions that release one or both parties from the performance of their contractual obligations due to the occurrence of an event beyond the control of the parties and making performance impossible or almost impossible. These provisions are provisions on « force majeure » (French for « force majeure »), and they often list an « act of force majeure » as one of the events that excuse the performance of the contract. A « force majeure event » for the purposes of a commercial contract is generally an extreme weather event such as a hurricane, blizzard, flood or similar natural event. Unfortunately, not all companies can say they had policies that protected them from an event like this. A force majeure clause can improve or affect companies` chances of receiving compensation for an event like this. Thus, if force majeure destroys your personal property or place of business, you cannot be insured for it. In addition, you cannot receive compensation for damage that any of the above storms may have caused.

In recent years, we have certainly gone through unpredictable times. Some companies are better prepared than others to deal with times like these. COVID-19 has disrupted many contractual arrangements across the country and caused significant economic damage to businesses. Protect your interests by working with experienced contract and dispute resolution lawyers at KPPB LAW. Contact KPPB LAW for help finding a practical solution and discussing your case. In the midst of the COVID-19 chaos, companies are relying on the clauses in the file in their contracts to avoid any liability for the performance of their contractual obligations. The extent to which the force majeure clause releases them, in whole or in part, from their contractual obligations is unclear. In any case, it depends on the wording of the contract itself.

When concluding a commercial contract, the parties must take into account the different contractual clauses they contain, the way in which the provision is formulated and the way in which they are interpreted in relation to the other provisions of the contract, the law, etc. In some jurisdictions, a party may need to prove that the business interruption was caused by events beyond its control and without adequate workarounds. In other States, they must not only prove that the business interruption was beyond their control, but also prove that the event was unforeseeable. Imagine that due to the onset of the COVID-19 pandemic, borders are closed, businesses have to close, and business operations stop. In economics, the term « act of God » is not associated with any particular religion or belief system. Contractual languages relating to force majeure are called force majeure clauses, which are often used by insurance companies. These clauses generally limit or eliminate liability for injury, damage and loss caused by force majeure. For example, you may need to prove that you have performed safety inspections for your building if you own a business or equipment that you used for your business. If you provide a service, you may need to prove that you have already undergone sanitary inspections to prove that the product worked well and that your employees had the ability to do their job.

In tort law, force majeure can be invoked as a kind of intervening cause, the absence of which would have avoided the cause or reduced the result of the liability (for example, the earthquake would be caused by the old poorly constructed building). However, the foreseeable consequences of unforeseeable causes may still give rise to liability. For example, lightning strikes a ship with volatile compressed gas, resulting in the expected explosion. Liability can be established if the carrier has not taken reasonable precautions to protect itself from sparks – regardless of their origin. Similarly, strict liability could void a force majeure defence if the defendant created the conditions under which any accident would result in damage. For example, a truck driver takes a shortcut on a secondary road and the load is lost if the road is destroyed in an unexpected flood. In other cases, it is found that an ordinary carrier is not responsible for the unpredictable forces of nature. See Memphis & Charlestown RR Co. v. Reeves, 77 U.S. 176 (1870). In response, you will need to get separate insurance coverage.

This will prevent you from being exposed to an act of force majeure, as Wimbledon did when taking out pandemic insurance. A force majeure clause in a contract does not mean that no one is liable for damages. A natural disaster such as a flood or earthquake is usually unpredictable or preventable. However, the insured cannot use the event as an excuse for not taking reasonable precautions to prevent or protect against damage. Others accept unfortunate events as part of life,[15] and refer to Matthew 5:45 (KJV): « for he lets his sun rise upon evil and good, and sends rain upon the righteous and upon the unjust. »