Force Majeure Clauses After COVID in U.S. Contracts

The COVID-19 pandemic tested force majeure clauses as never before. Contracts drafted without anticipating a global health crisis suddenly faced unprecedented disruption. Some force majeure provisions provided relief; many did not. The lessons learned from this experience have reshaped how American contracts address extraordinary circumstances. Understanding these changes helps you negotiate agreements that protect your interests when the unforeseeable occurs.

Force majeure, French for superior force, refers to events beyond the parties' control that make contract performance impossible or impractical. Before the pandemic, these clauses often received little attention during negotiation. Today, they are among the most scrutinized provisions in commercial agreements. This article examines how force majeure clauses have evolved and what to look for in modern contracts.

Force Majeure Before COVID

Boilerplate Treatment

Before 2020, force majeure clauses were often treated as boilerplate, standard language copied from form agreements without much thought. Parties focused their negotiating energy on price, scope, and other terms that seemed more likely to matter. The possibility of a global pandemic shutting down commerce seemed remote.

This approach left many contracts with force majeure provisions that did not actually cover pandemic scenarios. Clauses listing specific events like earthquakes, floods, and wars often did not include epidemics or government shutdown orders. Without explicit coverage, parties had to argue that pandemic conditions fell within general catch-all language, often unsuccessfully.

Narrow Interpretation by Courts

American courts have traditionally interpreted force majeure clauses narrowly. They require the triggering event to make performance truly impossible, not merely more difficult or expensive. Economic hardship alone typically does not qualify. Even if the listed event occurs, the affected party must show it could not have anticipated or avoided the impact.

This strict approach meant many businesses found no relief in their contracts when COVID struck. Performance that was merely disrupted, delayed, or made more costly often did not trigger force majeure protection. Parties learned painful lessons about the gap between what they thought their contracts covered and what courts would actually enforce.

Limited Duration and Scope

Pre-pandemic force majeure clauses often assumed short-term disruptions. They might excuse performance for a few weeks or months while an event persisted. The possibility of multi-year disruption was rarely contemplated. Similarly, the scope of relief was often limited to suspension of obligations rather than termination.

When COVID stretched on for years rather than weeks, these limitations created problems. Parties remained bound to contracts that made no economic sense, unable to terminate but also unable to perform normally. The inadequacy of traditional force majeure provisions became painfully apparent.

How COVID Changed Force Majeure

Pandemic-Specific Language

Post-COVID contracts now routinely include explicit references to epidemics, pandemics, and public health emergencies. This language removes ambiguity about whether disease outbreaks constitute force majeure events. Parties no longer need to argue that a pandemic falls within terms like acts of God or events beyond reasonable control.

However, explicit pandemic language cuts both ways. Once the possibility is acknowledged, parties must address whether future COVID waves or new pandemics trigger force majeure, or whether these are now foreseeable risks that must be absorbed. The very act of contemplating pandemic risk changes how courts view claims of impossibility.

Government Action Coverage

Modern force majeure clauses now explicitly cover government actions including lockdowns, shelter-in-place orders, capacity restrictions, travel bans, and mandatory closures. These provisions recognize that government response to emergencies, not just the emergencies themselves, can make performance impossible.

This expansion reflects the COVID experience, where many businesses could physically perform but were legally prohibited from doing so. Traditional force majeure language covering natural disasters did not clearly apply when the obstacle was a government order rather than physical destruction.

Supply Chain Disruption

Contracts now address supply chain disruption more explicitly. Force majeure clauses may cover inability to obtain materials, transportation disruptions, supplier failures, and labor shortages. These provisions recognize that even when a party's own facilities are unaffected, disruption elsewhere in the supply chain can prevent performance.

The interconnected nature of modern commerce means problems in one location ripple through global supply networks. Post-COVID force majeure clauses acknowledge this reality and provide clearer guidance on when supply chain problems excuse performance.

Extended Duration Provisions

New force majeure clauses contemplate longer-lasting events and provide clearer rules for extended disruption. They may set timeframes after which either party can terminate rather than remaining in limbo indefinitely. Some include graduated responses, with different rules applying as the force majeure event continues.

These provisions address the uncertainty COVID created for ongoing contractual relationships. When neither party knows when normal operations will resume, clear rules about termination rights and ongoing obligations become essential.

The Relationship to Other Contract Terms

Force Majeure and Liquidated Damages

Understanding what are liquidated damages helps clarify how force majeure interacts with other contract provisions. A liquidated damages clause in contract specifies predetermined damages for breach. The question arises whether force majeure events excuse not only performance but also liquidated damages that would otherwise apply for non-performance.

Well-drafted contracts address this interaction explicitly. A liquidated damages provision should state whether force majeure events suspend the accrual of liquidated damages or whether they continue to run. Without clear language, disputes may arise about whether a party owes predetermined damages for delays caused by events beyond their control.

Limits of Liabilities

Force majeure clauses also interact with limits of liabilities provisions. If force majeure excuses some but not all non-performance, remaining liability may be subject to contractual caps. The interplay between excuse doctrines and damage limitations affects the total risk each party bears.

Post-COVID contracts often include more detailed provisions addressing how these clauses work together. Rather than leaving interactions to court interpretation, modern agreements specify which limitations apply to which circumstances and how force majeure affects the overall liability framework.

Insurance Requirements

Many contracts require parties to maintain insurance against specified risks. Force majeure events may be covered by insurance, affecting whether contract provisions excuse performance. If insurance is available to cover a risk, courts may be less willing to find that performance was truly impossible.

Modern contracts address whether insurance availability affects force majeure claims. They may require parties to seek insurance recovery before invoking force majeure or may specify that force majeure applies regardless of insurance. Clear drafting prevents disputes about the relationship between insurance and contractual excuse.

Drafting Modern Force Majeure Clauses

Specificity Versus Flexibility

A fundamental tension in force majeure drafting is between specificity and flexibility. Listing specific events provides certainty, meaning if the listed event occurs, force majeure applies. But lists cannot anticipate every possible disruption, and events not listed may not be covered.

General catch-all language provides flexibility but invites disputes about whether particular circumstances qualify. Courts often require that catch-all language be interpreted in light of the specific events listed, limiting its scope to similar situations.

Best practice is to combine specific listings with appropriate catch-all provisions. List the events most likely to occur, explicitly include pandemic and government action language, and add general language covering other events of similar nature that make performance impossible.

Triggering Standards

Force majeure clauses must specify what the event must do to trigger protection. Common standards include making performance impossible, impracticable, illegal, or commercially unreasonable. Each standard has different legal meaning and different likelihood of court enforcement.

Post-COVID clauses often use broader standards than traditional language requiring strict impossibility. Impracticability or commercial unreasonableness acknowledges that performance might be physically possible but economically devastating. However, broader standards also create more room for disputes about whether the threshold has been met.

Notice Requirements

Modern force majeure clauses include detailed notice requirements. The affected party must notify the other party promptly, specify the nature of the force majeure event, explain its impact on performance, and provide updates as circumstances change. Failure to comply with notice requirements may forfeit force majeure protection.

These requirements protect the non-affected party by ensuring timely information about disruptions. They also create a contemporaneous record of what the affected party knew and when, which can be important if disputes later arise about whether force majeure was properly invoked.

Mitigation Obligations

Force majeure does not excuse parties from taking reasonable steps to minimize disruption. Modern clauses explicitly require mitigation efforts including seeking alternative suppliers, using different transportation, finding substitute performance, or taking other steps to overcome obstacles.

The liquidated damages provision may specify what happens if mitigation efforts fail. If a party cannot mitigate despite reasonable efforts, force majeure continues to apply. If mitigation is possible but the party fails to pursue it, protection may be lost.

Termination Rights

Post-COVID force majeure clauses often include clearer termination rights. If the force majeure event continues beyond a specified period, either or both parties may terminate without liability. This prevents indefinite contractual limbo when there is no realistic prospect of normal performance resuming.

Termination provisions should address what happens to partial performance, advance payments, work in progress, and other issues that arise when contracts end prematurely. Clear rules reduce disputes when parties part ways due to circumstances neither anticipated.

Common Pitfalls

Foreseeability Problems

After COVID, pandemics are foreseeable. After supply chain disruptions, similar disruptions are foreseeable. This foreseeability creates problems for future force majeure claims. Courts may find that parties who knew about a risk should have planned for it rather than relying on force majeure as an escape hatch.

Modern contracts must grapple with this foreseeability challenge. Simply listing pandemic as a force majeure event may not help if courts conclude that pandemic risk should have been allocated through other contract mechanisms like pricing, insurance requirements, or explicit risk allocation provisions.

Failure to Update Old Contracts

Many businesses continue operating under contracts signed before COVID. These agreements likely contain inadequate force majeure provisions based on pre-pandemic assumptions. When these contracts come up for renewal or amendment, parties should update force majeure language to reflect post-COVID realities.

Relying on old force majeure language in a post-COVID world creates unnecessary risk. Even if the current contract seems unlikely to face pandemic disruption, the next force majeure event may expose gaps that updated language would address.

Inconsistent Provisions

Force majeure clauses must be consistent with other contract provisions. If one section requires performance regardless of circumstances while another provides force majeure relief, conflicts arise. Similarly, if limits of liabilities apply to some breaches but not others, the relationship to force majeure must be clear.

Post-COVID contract review should examine the entire agreement, not just the force majeure clause in isolation. Ensuring consistency across provisions prevents disputes about which terms control when circumstances are not clearly covered.

One-Sided Provisions

Some force majeure clauses provide relief to one party but not the other. The drafting party may protect themselves from force majeure consequences while holding the other party strictly liable. These one-sided provisions may be challenged as unconscionable, but they often are enforced between sophisticated parties.

Negotiating balanced force majeure provisions protects both parties from events neither can control. If both parties face the same external risks, both should have similar protection when those risks materialize.

Beyond Force Majeure

Common Law Doctrines

When force majeure clauses do not apply or do not exist, common law doctrines may provide relief. Impossibility, impracticability, and frustration of purpose are contract defenses that excuse performance when circumstances make it impossible or fundamentally different from what the parties contemplated.

These doctrines are difficult to invoke and courts apply them narrowly. Force majeure clauses provide more predictable protection because they define in advance what events qualify and what relief is available. But when contractual protection fails, common law may offer a fallback.

Material Adverse Change Provisions

Some contracts include material adverse change or material adverse effect clauses that trigger rights when significant changes occur. These provisions may overlap with force majeure, providing alternative bases for relief or termination when circumstances change dramatically.

Post-COVID contracts increasingly use MAC or MAE provisions to address circumstances that may not qualify as force majeure but still significantly affect the transaction. Understanding how these provisions interact with force majeure helps parties evaluate their full range of options when problems arise.

Hardship Clauses

International contracts often include hardship clauses that require renegotiation when performance becomes excessively onerous. Unlike force majeure, which excuses performance, hardship provisions require the parties to try to find solutions before either can walk away.

American domestic contracts are increasingly adopting hardship concepts, recognizing that forcing strict performance under dramatically changed circumstances may harm both parties. These provisions encourage flexible responses to changing conditions rather than all-or-nothing force majeure determinations.

Practical Recommendations

Review Existing Contracts

Audit your current contracts for force majeure coverage. Identify agreements with inadequate provisions and prioritize them for renegotiation. Pay particular attention to long-term contracts, high-value agreements, and relationships where disruption would cause significant harm.

Negotiate Actively

Do not treat force majeure as boilerplate. Engage with the specific language and ensure it covers the risks most relevant to your transaction. Consider what events could disrupt performance and whether the force majeure clause provides appropriate relief.

Address Interactions

Ensure force majeure works with other contract provisions. Check that liquidated damages clause in contract language addresses force majeure events. Verify that limits of liabilities provisions interact appropriately with excuse doctrines. Confirm that insurance requirements and force majeure claims are coordinated.

Document Everything

If you need to invoke force majeure, documentation matters. Keep records of how events affected your ability to perform, what mitigation steps you took, when you provided notice, and how circumstances evolved. This evidence will be crucial if disputes later arise.

Seek Professional Review

For significant contracts, have a lawyer review force majeure provisions. Post-COVID force majeure drafting has become more sophisticated, and professional guidance helps ensure your agreements provide adequate protection.

Conclusion

The COVID-19 pandemic transformed force majeure from an afterthought to a central concern in contract negotiation. Modern force majeure clauses reflect lessons learned from unprecedented disruption, including explicit pandemic coverage, government action provisions, supply chain language, and clearer duration and termination rules.

Understanding what are liquidated damages and how they interact with force majeure, along with limits of liabilities provisions and other contract terms, helps you evaluate the full picture of risk allocation in your agreements. A liquidated damages provision should work in harmony with force majeure language to provide predictable results regardless of what circumstances arise.

Do not assume that standard force majeure language protects you. Review the specific provisions in your contracts, negotiate for appropriate coverage, and ensure that force majeure works with other terms to create a coherent framework for addressing the unexpected. The next disruptive event is unknowable, but your contracts can be prepared for it.