Is a Pandemic an 'Act of God'?

With the current impact on industry across the globe, force majeure clauses will be doing a lot of heavy lifting in the coming months. In this article, I’ll take a look at these clauses and how you can use them to your advantage – inspired by a very timely question from a contact.

No doubt you’ll know that there’s a certain global threat to our health, the economy and our livelihoods that’s getting a lot of air time at the moment. 

You know the one? Good. 

Rather than dwelling on the severity of the situation right now, I’d like to try to be proactive, learn and grow from the experience. 

On that note, I recently received a very topical question.

Q: Do the exact words ‘epidemic’ or ‘pandemic’ need to be stipulated in force majeure clauses, or is this event covered as an ‘Act of God’?

It’s an excellent question. Let’s take a look, shall we?

What’s a Force Majeure Clause?

Force majeure as a contractual term comes from the French for ‘superior force’. Fittingly, a force majeure (FM) event is an unavoidable catastrophe that prevents you from fulfilling your contractual obligations on a project. 

The impact of the event needs to be significant – inconvenience or a reduction in profits isn’t likely to be enough to qualify. A FM clause can also be relevant if the event has caused you to fail to complete your obligations within a specific time period. That’s why many contracts will reference force majeure events when listing conditions for Extensions of Time. 

Here are some examples of situations that could be considered force majeure events: 

• Natural disasters
• War or terrorism
• Fire
• Outbreaks of disease

Force majeure clauses can be worded in a variety of ways. Some are very specific. Some impose particular conditions on types of situations to explain whether they would – or would not – be considered FM events.

Others are broad, and list the types of events but don’t go into detail. 

But how specific does your force majeure clause have to be? Which kinds of event need to be explicitly spelled out, and which kinds would be covered under more general terms?

And, the big one: is a pandemic an ‘Act of God’?

Unfortunately, there’s no simple answer here. 

In short, it’s a grey area. I’m sorry.

The thing is, an epidemic could be argued as an act of God, but whether or not you’re going to be successful with this line of argument is largely out of your control. And the contracts with broadly defined FM clauses – and room for interpretation – will no doubt be the ones flowing through our court systems over the following months and years. 

Potentially, when these cases start to pop up (and there will be a spate of them!) a precedent will start to appear. It’s also possible that the courts will look to historical decisions around other pandemics, for example the outbreak of Swine Flu (2009), for inspiration. 

So what can I do?

If you haven’t already, now is the time to submit a Force Majeure Notice/Letter for any active project that involves contracts and/or POs. 

Make no mistake, this is critical: if you don’t submit this notice, you could be forfeiting your right to apply for an EOT. 

Most contracts will require you to submit this notice within a specified period of days. So even if ‘epidemic’ or ‘pandemic’ isn’t listed as an FM event in your contract, it’s a good idea to submit the notice anyway to cover yourself – and do it now. 

We’ve got enough shortness of breath to deal with right now as it is. Let’s take hyperventilating over a court case out of the equation, shall we?

This is general information and is not intended to be considered legal advice. For advice specific to you and your contract, we can help. Shoot me an email at [email protected], or PM me if you’d prefer.