In the early days of the COVID-19 pandemic, shelter-in-place and other “lockdown” orders had many impacts, including impacts on the performance of commercial contracts. Once again, a commercial contract and COVID-19 are together in the news, although this time it has nothing to do with lockdown orders. Nevertheless, this latest development once again makes for a good time to look at the significance of force majeure clauses in commercial contracts, and to remind readers of the vital importance of a skilled Atlanta commercial contracts lawyer when negotiating, drafting, or enforcing a commercial contract and its force majeure clause.
The newest development regarded a manufacturer of one of the COVID-19 vaccines and one of its billion-dollar contracts. Earlier today, the government of Poland announced that it was unilaterally backing out of commitments to buy large quantities of the BioNTech/Pfizer vaccine.
The country’s health minister told TVN24 that Poland “used the force majeure clause and informed both the European Commission and the main vaccine producer that we are refusing to take these vaccines at the moment and we are also refusing to pay.” The value of the Polish commitment to buy from Pfizer, which ran through the end of 2023, was $1.4 billion (US).
The minister indicated that the COVID-19 outlook for his country was greatly improved. Additionally, the unforeseen crisis of Ukrainian refugees who fled to Poland to escape the war in their home country had greatly strained the nation’s public finances, according to the minister.
How Force Majeure Clauses are Handled Here in Georgia
While your business (or your contract partner’s business) may not find itself overwhelmed with the financial consequences of a refugee crisis, unforeseen yet massive events may unavoidably alter the trajectory of the performance of your contract. When that happens, you need to know what your contract’s force majeure clause says. Even before that, you need to make sure that the force majeure clause you sign matches what you need.
This is all very important because Georgia law has some very specific rules regarding how force majeure works. For one thing, if you think you might need to invoke your agreement’s force majeure clause in the future, you need to be certain you negotiate (and obtain) a clause that lists all the possible bases for invoking the clause… because, if it’s not clearly stated in the clause, it likely won’t be a valid basis for invoking force majeure.
Consider this case from 2006. Back in 2004, an Atlanta construction firm inked a deal to construct some on-campus apartments at Georgia Tech. The firm agreed to do the job for a guaranteed maximum price and by a specific deadline date.
An unexpected steel “crisis” led to a massive increase in the cost of materials and the delivery of those materials. The construction firm first requested a 67-day deadline extension (which was refused) and later sought a seven-figure payment through legal action. The courts rejected the construction firm’s arguments, noting that the contract it signed had a force majeure provision, that the clause listed specific allowable bases for non-performance, that those bases only included “governmental preemption of materials in connection with a national emergency,” “riot, insurrection, or other civil disorder affecting performance,” and “unusual and extreme weather conditions constituting Acts of God.” Because none of those applied to the construction firm’s circumstance — and there was nothing about invoking force majeure for a steel crisis — the company couldn’t invoke the clause and lost its case.
As this news development and this court case illustrate, details matter, especially when you’re dealing with commercial contracts and force majeure clauses. Whether you are needing to negotiate a deal, get an agreement put on paper, or enforce an already executed contract, you need an experienced partner in your corner. The knowledgeable Atlanta commercial contract attorneys at Poole Huffman, LLC are here to help, offering the skills and the know-how to protect your business interests. Contact our attorneys online or by calling (404) 373-4008 to schedule your confidential consultation today.