Suppliers have faced unique challenges in keeping their products and services flowing into the marketplace during a pandemic. In response to COVID-19, suppliers have revisited their default procedures and have developed solutions to these new challenges, including implementing social distancing and improved health practices, designing solutions to comply with various forms of government orders, repairing issues with their supply chain, and reformulating stocking levels. An overhaul of contract provisions is yet another improvement suppliers can implement to shore up their defenses in case of emergency events.
According to a recent survey, 47% of in-house counsel have identified contract complications resulting from the COVID-19 pandemic1. Accordingly, revisions to contract templates to reduce future complications have made it onto the in-house counsel to-do list. Prior to the appearance of COVID-19, force majeure was one area of commercial contracting that was commonly glossed over during drafting projects and negotiations. Now, force majeure provisions are a major focal point for revision by suppliers in their form contracts.
In evaluating existing force majeure language in form contracts, suppliers should pay particular attention to the following:
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1 Uetz, Ann Marie et al., 2020 Global Supply Chain Disruption and Future Strategies Survey Report, https://www.foley.com/-/media/files/insights/publications/2020/09/foley-2020-supply-chain-survey-report-1.pdf (last visited October 6, 2020).