COVID-19 Legal Series (1): How to Manage Contractual Performance Amid Coronavirus Outbreak?

The epidemic caused by the outbreak of the novel coronavirus (COVID-19) has posed unprecedented challenges to many companies in China, as well as in many parts of the world.  China has ordered various levels of lockdown on several dozen cities, with measures ranging from complete closure of public transportation to registration requirement for residents to travel in and out of their communities.  For individuals, many have been holed up in their homes for weeks during this traditionally busy time of the year.  Internationally, over 60 countries have imposed travel restrictions on Chinese citizens or anyone traveling from or through China.  For example, both Australian and the United States governments have placed temporary bans on anyone who visited mainland China in the 14 days prior to their arrival.

I .   Relief From Liabilities Under Force Majeure

Many business contracts have a standard force majeure clause, which relieves a contracting party from liabilities for non-performance due to some exceptional circumstances.  A comprehensive force majeure clause should cover the definition of force majeure events and what happens should a force majeure event occurs, as well as how a party may trigger its application.