Force Majeure in the Time of COVID-19 By: Michael Miller Michael P. Miller, PLLC; affiliated with Sadler Law Group, PLLC “The man who smiles when things go wrong has thought of someone else he can blame it on.” - Robert Albert Bloch While it is assumed that the reader is well acquainted with the concept of force majeure, the purpose of this article is to discuss the employment of a force majeure clause to excuse nonperformance due to executive orders issued by the federal and various state governments that prevented or encumbered workforce activity in an attempt to slow the progression of COVID-19. This article identifies operative components of a typical force majeure clause and the normal analysis of the same usually undertaken by courts. Although COVID-19 is the first worldwide pandemic in over 100 years1 and its global impact on all aspects of society has been monstrous, an analysis of its impact as to whether its effects could trigger an exercise of a force majeure clause is no different than that for any other event. It may be interesting to note that the concept of Force Majeure dates back to Roman law under the names of “via major” or “vis divina,” used as an excuse for nonperformance due to unforeseeable and “irresistible” events. Subsequently, the French included this concept as a “force majeure” in the French Civil Code dating back to 1804.2 In common law, the concept began an adoption of an existing excuse for nonperformance due to impossibility, and the English embraced the concept to forgive nonperformance when there was an “Act of God or the existing King’s Enemies” that prevented total performance. 3 Unlike its common law cousins of impossibility, impracticability and
frustration of purpose, force majeure is a purely contractual concept which otherwise does not exist in current common law. It should be noted that while there are remnants of Texas law that treat impossibility and impracticability differently, over time Texas courts have gradually blended these concepts and now recognize no functional distinction between impossibility, impracticability and frustration of purpose. 4 The purpose of a force majeure clause is to allocate risks for nonperformance caused by events which are superior and cannot be overcome by a contracting obligor, by providing a defense for the nonperformer. Generally, the nonperformer bears the burden of proof to establish such defense. 5 Typically, there are two operational components found in a force majeure clause: (1) catch-all language, and (2) identification of express events. Catch-all language exists in an attempt to excuse nonperformance of contract terms due to the occurrence of an unforeseeable event that has made performance impossible or impracticable. To be an effective agent of excused performance under the catch-all term of a force majeure clause, it is important that such event was unforeseeable at the time the parties entered into the contract. 6 Catch-all events are usually caused by acts of God (flood, hurricane, fire, earthquake, etc.) or uncontrollable events caused by people (unanticipated legislation and changes in agency rules, riots, strikes, wars, terrorist acts, severe civil unrest). A typical catch-all force majeure term frequently found in an oil and gas lease effectively states that should the Lessee be prevented from complying with any express or implied condition or covenant of the lease, from conducting drilling or reworking operations thereon or from producing oil or gas therefrom by reason of a force majeure, then while so prevented, the Lessee’s obligation to comply with such covenant or condition shall be suspended, and Lessee shall not be liable in damages for
