One Force Majeure For Me Please!

By: Omer Kalo

The Coronavirus caught the West by surprise. Like its cousins SARS and MERS, months ago this entire epidemic seemed like none of the Western World’s business. However, while in the past the storm has faded away in the Far East before it could reach Western shores, this time it hit us hard and where it hurts our wallets.

The epidemic drove the entire financial system crazy. The stock markets and various indices like the Dow Jones, the S&P 500 fell precipitously. No one was immune as lost incomes and force govenemtn lock downs caused many companies to default on their legally contractual obligations. Raising broad interest in a common but esoteric area of contracting, Force Majeure.

A Force Majeure is the French term for an act of God or power of nature. Typical examples are earthquakes, fires and hurricanes. Rarely an epidemic, and never one to the degree of COVID-19. This simplified term binds all natural disasters together, but the legal meaning is actually much more complex. Legally, a Force Majeure is defined as- “a clause that is included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events and restrict participants from fulfilling obligations”. What does it actually mean? It means that if an act of God was wrought upon us, I might be free of my contractual obligations as long as I prove in court of law that the natural disaster had a direct or even a sufficient link to my inability to fulfill my side of the bargain.

The Force Majeure clause is a common one in many legislative systems. The French have it, The Americans just love it, and Israel even implemented it in the Israeli codex, more specifically- Clause 18 to the Israeli Contract Law (Remedies). What is even more interesting when zooming in on Israel, is that this clause was never enforced, and giving that it was brought up and denied time after time in relation to wars and military conflicts occurring in Israel, it seemed that there wasn’t going to be any use for that clause.

However, what Israel was yet to be confronted with, alongside most of the world’s countries, was an epidemic such as the Coronavirus. The fact that people are actually forced to shut down their businesses and keep themselves quarantined under a governmental order is affecting the private sector dramatically. People are incapable of going to work and do their jobs, hence, they are sometimes incapable of fulfilling a legally binding contract. Because of this situation, it is now believed that the spread of the COVID-19 would be of a legitimate and valid claim, worth bringing up in court, that might result in people being released of their contractual shackles.