March 27, 2020
David Outerbridge has told Canadian Lawyer that as many organizations now consider force majeure clauses in their contracts, the first step is to undertake a thorough examination of the contract to identify a force majeure or other clauses.
David told the publication that the application of force majeure depends on the wording of the clause, among other considerations, adding that in-house counsel should approach counterparties on a co-operative manner.
“If both parties are in agreement, the situation will be relatively simple but if one party disagrees, the other party will have to provide evidence to indicate entitlement to exit the contract,” the Canadian Lawyer article says.
“In each case it really depends on the terms of your contract,” David said.
“The concept of force majeure is not a general legal principle. It only applies if you have a contract that gives you the force majeure right.
“Typically, the force majeure clause requires notification of what the force majeure clause is and some type of demonstration that there is no way to mitigate the problem.
“You don’t want to be in a situation where the other side disagrees.”
You can read the remainder of David’s comments on the issue on the Canadian Lawyer website.
David and a team of Torys lawyers have written a piece on force majeure clauses in light of COVID-19. You can learn more about considerations for your organization by reading “COVID-19 and force majeure clauses: key considerations, implications, and practice tips”.
At Torys, we understand the how the pandemic is presenting challenging and unique circumstances for businesses. We are keeping close watch on developments as they unfold, and have established a resource centre on our website, COVID-19 guidance for organizations, where you can find our latest updates for businesses navigating COVID-19-related issues.