Unpredictable circumstances, such as the COVID-19 pandemic that led to the implementation of the Luzon-wide enhanced community quarantine, subject business legalities to certain adjustments. The concept of force majeure, or “acts of God,” affects contracts in the case that a party involved is not able to perform an agreed-upon obligation.
Atty. Dominique P. Gana of Gana Manlangit Law Office gave us an overview of how the clause applies during COVID-19.
What is force majeure?
Force majeure is essentially an extraordinary circumstance that is independent of the will of the obligor (the person required to perform an obligation such as a certain contractual stipulation) and could not have been foreseen. Examples are floods and robberies, among others.
Is a pandemic of this magnitude considered a force majeure and can businesses enforce this clause (assuming it’s in the contract)?
Yes, it is possible because of the enhanced community quarantine where only certain essential businesses are allowed to operate by the government. However, whether or not COVID-19 can be considered a force majeure event that can be enforced in a contract depends on the specific contractual stipulations.
Are there cases when you can invoke it? Is there a law discussing its premises?
Yes, there are many cases when you can invoke force majeure. The civil code is the governing law for the principles of force majeure.
What are the exceptions?
A contract can be exempted from force majeure if the law or provision of the contract itself states liability, if the nature of obligations requires the assumption of risks, or if a party is guilty for the delay of obligation.
To what businesses does a force majeure apply? Are contracts required to have this?
Most contracts will include force majeure clauses so that it covers all scenarios. Force majeure can apply to any business. The governing law is the civil code but there can be contractual stipulations for stricter or more restrictive force majeure provisions.
Should a contract fail to adhere to force majeure, where can involved parties file an appeal?
One option would be for a business owner to file a case in court for breach of contract if there is a violation of one of the force majeure stipulations.