Corona Virus and Force Majeure

A post on American Bar Association’s (ABA) website and a comment by a colleague prompted me to write this. Let me begin by posing a question: can a pandemic be considered as a force majeure? The importance of this post may be revealed later as the economy opens up and creditors require debtors to perform their obligation, repudiate an agreement or hold debtors liable for failure.

 

Covid-19 is shaking the world- all 6 continents are being put to the test- who expected life to be like this some months ago? Covid-19’s impact goes far beyond the health system. It is having enormous amount of political and economic pressure on governments. The unavailability of vaccine, scientists’ lack of understanding of its real nature and the origin makes the virus dreadful. Though billions of dollars are poured to research, no pharmaceutical firm managed to come up with a long lasting solution except socially engineered solutions like social distancing, staying at home, cleaning hands, etc.

 

Obviously, the pandemic has a deep economic impact on start-ups and big firms. Many governments are devising stimulus package and/or these businesses are asking for a bailout. This means that the performance of many commercial agreements will be disrupted: debtors will keep getting emails, phone calls from creditors asking to deliver a thing, sell their service or whatever scenario which comes to your mind.

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