The COVID-19 pandemic has caused widespread disruption in business operations across the world. With the uncertainty surrounding the virus`s impact and government mandates changing frequently, it`s crucial to have a plan in place for unforeseen circumstances. One way to do so is by including a COVID clause in contracts. A COVID clause is a provision outlining how the parties will deal with the impact of the pandemic on the performance of the contract. In this article, we will provide an example of a COVID clause that can be included in contracts to protect the interests of all parties involved.
Example COVID Clause in Contract:
Force Majeure:
If the performance of any obligation under this contract is prevented, hindered, delayed, or otherwise made impracticable due to any circumstance beyond the control of a party, including but not limited to, acts of God, pandemic, epidemic, war, terrorism, riots, strikes, or unforeseen government actions, then the affected party shall not be held liable for any failure to perform its obligations under the contract, provided that the affected party promptly notifies the other party in writing of the nature and extent of the force majeure event.
Effect of Force Majeure Event:
If a force majeure event occurs that affects the performance of this contract, the parties shall mutually agree to extend the time for performance equal to the period of such delay, or, if the delay is prolonged for more than 30 days, either party may terminate this contract without penalty.
Allocation of Risks:
The parties acknowledge and agree that the allocation of risks set forth in this clause is reasonable and reflects a fair balance of the risks between the parties and their mutual expectations for the performance of this contract.
Conclusion:
Including a COVID clause in contracts is essential in mitigating potential losses due to unforeseeable circumstances such as the COVID-19 pandemic. The above example is not exhaustive, and the language of the clause may vary depending on the nature of the contract and the parties involved. The COVID clause should be carefully drafted to ensure that it covers the risks that are most likely to arise and adequately protects the interests of the parties. It is recommended to seek legal advice for the drafting of such clauses, as the interpretation of these clauses may vary depending on the jurisdiction and local laws.