WHAT DOES YOUR FORCE MAJEURE CLAUSE REALLY MEAN?

Apr 9

What is a force majeure clause and what impact might it have on your lease?

Given these uncertain times precipitated by the COVID-19 pandemic, these questions are certainly valid. Many leases contain a clause known as a force majeure clause. Broadly, a force majeure clause is an excuse by one party from performance under a contract due to commercial impracticability. Thus, it is presented as a defense to a breach of contract.

“Force majeure” is defined as a “greater or superior force, or an irresistible force.” The test for whether a force majeure clause applies is whether “under the particular circumstances there was such an insuperable interference occurring without the party’s intervention as could not have been prevented by the exercise of prudence, diligence and care.” Put another way, force majeure events are beyond the control of the parties. Though not necessarily restricted to the equivalent of “an act of God,” courts have found force majeure applicable in cases involving lightning, storms, sunstroke, freezing, earthquakes, floods, fires, and even labor disputes and civil unrest.

So what does this mean for landlords and tenants? Whether the COVID-19 pandemic constitutes a force majeure event under your Lease will depend on the interplay between the verbiage of your lease, the nature of any nonperformance under the lease, and the law, which includes recent Executive Orders from Governor Newsome (See, e.g., Executive Order N-28-20) and ordinances passed by local governments. Likewise, the rights and obligations of the parties should this constitute a force majeure event will be dictated by the parties’ lease. For example, a force majeure clause in a lease may allow a tenant to forbear rent for a period equal to that in which its performance has been prevented but would not excuse the tenant from rent or other monetary obligations altogether.

Both landlords and tenants should be familiar with their leases and should have an experienced attorney in their corner to ensure that their rights are protected in these uncertain times.

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Andrew Hall

Attorney Andrew Hall has over 10 years of experience handling complex real estate, business, and litigation matters throughout California and Washington. Andrew has vast experience with a wide range of clients – from residential to commercial property owners, landlords to tenants, real estate agents to brokers, title to escrow companies, hard money lenders to banking institutions. Andrew has handled cases ranging from administrative disputes, to unlawful detainers, to bankruptcies, to litigation, leaving his clients with the confidence that he can handle all of their needs from soup to nuts.

Andrew is committed to exploring efficient and cost-effective resolutions for his clients, whether that be through informal conversations with parties or attorneys, mediations, or settlement conferences. However, when litigation is inevitable, Andrew has counseled his clients through all stages of a dispute, including arbitrations, court trials, jury trials, and appeals at both the State and Federal Court levels.

Andrew resides in Carlsbad with his wife Lauren, son Nolan (7), and daughter Madeline (5). Andrew is actively involved with the Magdalena Ecke Family YMCA, where he can often be found on the weekends cheering Madeline on in any variety of youth sports or with Nolan participating in the Y’s Adventure Guides Program. Andrew enjoys playing golf, tennis, softball and good barbeque.

Andrew is committed to identifying his client’s goals and employing his big firm experience with small firm attention to help his clients achieve those goals.