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Editor's Note: In the following sample letter, the supplier rejects the customer's declaration that a force majeure event prevents its performance under the agreement. The force majeure clause in question refers specifically to a pandemic and related disease outbreaks.
Rejection of Force Majeure Declaration
Re: Declaration of Force Majeure - Supply Agreement dated [Date]
Dear [Contact Person]:
We are in receipt of your notification dated [Date] in which you assert that an event in the nature of force majeure has occurred and is preventing performance of your obligation to purchase [Product] under the above Supply Agreement. You claim that [offloading facilities for [Product] in [Location] have been significantly curtailed] as a result of [labor shortages and governmental action to contain the spread of the novel coronavirus (Covid-19) pandemic in [Country/Location]], and that such a condition is a “cause outside the control of a party” which excuses performance.
Comment: A party receiving a force majeure notice should always acknowledge receipt, even if it is apparent that a force majeure event has occurred and regardless of whether the recipient agrees or disagrees with the declaration. A close review of the contract's force majeure language needs to be performed prior to responding. Keeping lines of communication open while the effects of the event are ongoing provides the non-affected party with opportunities to monitor the affected party and its efforts to mitigate or remedy the cause and resume performance.
We note that the “force majeure” provision of the Supply Agreement, section [xx], sets forth a list of events or occurrences that the parties have agreed constitute an event of force majeure. Included in this list are “epidemics, pandemics, infectious diseases . . . quarantines . . . government rule or order. . .” Assuming that the current Covid-19 pandemic and governmental orders to restrict business activities at [Location] qualify as force majeure events under the Agreement, section [xx] also requires that the designated event prevent the party from performing.
While we may agree that, under the Agreement, a force majeure event has occurred, we disagree with you that your performance is being prevented or made impossible. [The Agreement states that delivery and passage of title take place FOB designated port of export. No condition exists at [Export port] affecting your ability to accept Product at that delivery point. Moreover, the Supply Agreement contains no requirement that Product be capable of offloading at any particular location. Consequently, we maintain that your performance has not been prevented since alternate ports for offloading are or may be available. You have not indicated that you have conducted a search for other available offloading alternatives or that such a search would be burdensome and fruitless.]
Comment: The party invoking force majeure typically has the burden of proving that the force majeure provision of the parties’ contract properly applies to the claimed situation (see Point of Law (POL)), and is the cause of the party's nonperformance. Court Opinions Search. Most courts construe the terms of a force majeure clause narrowly to determine whether the risks the parties have agreed are outside their control and will excuse performance. In the case of the coronavirus pandemic, it is not enough that the disease has occurred and has affected commerce. The party invoking the benefit of the force majeure provision has the burden of showing the causal relationship between the outbreak of the disease and its (non)performance under the agreement. The recipient party is well within its rights to request further information and/or to challenge the force majeure declaration if it believes the facts do not support the causal relationship.
For the above reasons, we reject your declaration that the force majeure provisions of the Agreement excuse your performance. We expect that deliveries of [Product] will resume immediately [and insert other contractual performance expectations] and await your confirmation to this end.