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Editor's Note: This Notice communicates the inability of a supplier to provide products for a period of time on the basis of the novel coronavirus pandemic, and invokes the force majeure provision of the underlying contract as the legal excuse for the delay. The form is silent as to whether the contractually agreed force majeure events explicitly refer to an epidemic, pandemic or illness.
Access our Transactional Precedent Database for commercial Force Majeure Clauses in publicly filed agreements.
FORM OF FORCE MAJEURE NOTICE
Re: Supply Agreement dated [Date]
Ladies and Gentlemen:
[We are writing to confirm the message conveyed in a [Telephone Call or E-Mail] on [Date] to your [Name or Title].]
Comment: The party affected by force majeure is typically obligated to provide prompt written notice to the counterparty of the occurrence of the force majeure event (in reasonable detail) and the expected duration of the event's effect on the party. Frequently, the affected party will alert counterparties of a force majeure event in an immediate broadcast telephone or email message followed by a more complete written confirmation. Depending on the nature of the event and the party affected, counterparties may first learn of the occurrence in a news report. In any event, it is in the affected party's interest to inform counterparties quickly to put them on notice that the affected party is declaring a force majeure event. This applies even when the event is of such a widespread nature (such as the novel coronavirus pandemic) that the counterparty is undoubtedly aware of the event and its impact on the affected party from other sources.
Please be advised that, due to the spread of the novel coronavirus disease (COVID-19) and its impact on the businesses that supply [One or more critical parts or raw materials – specify] to us, we are unable to meet the [Product] demands of our Supply Agreement with you. Effective [Date], [all] manufacturing at our facility in [Location] has been suspended. On-hand finished inventory will be shipped to customers subject to the availability of transportation resources. In accordance with section [xx] of the above referenced agreement, we are hereby declaring that the current novel coronavirus pandemic is an event of force majeure, which excuses our performance while the effects of this event are continuing.
Comment: The party affected by force majeure will want to review carefully the force majeure clause of the commercial agreement and mirror the wording of the clause as closely as possible in its declaration to the counterparty, both as to the specific event constituting the force majeure and its consequent effect on the party's performance.
While parties commonly perceive force majeure clauses as a defense or shield from liability, declaring a force majeure is not without risk to the affected party. The notice is an admission that the party cannot perform its contractual obligation, and a counterparty may disagree with or reject the declaration. In a litigation, the affected party normally has the burden of proving that occurrence of the claimed event was unforeseeable and made performance impossible.
During the period of the force majeure, non-affected parties may seek to cover their purchase or sales requirements from alternate sources.
At this time, we anticipate that the facility will be closed for at least [Duration]. We will provide updates regarding this situation [At Regular Intervals], [Including by Press Release or Public Statement].
Comment: During the course of a force majeure event, the contracting parties are likely to engage in a number of formal and informal communications regarding the impact of the event and status of the affected party's recovery.
Please direct any questions about this matter to [Name].