Force Majeure

[Audicab]

Morning all, I'm sorry this is another Coronavirus topic but it is one that has me concerned. We are a B2B lead generation company with monthly retainer clients generally on contracts with 3 months notice periods.

We have had one client who we have worked with for 3 years email us yesterday cancelling the contract with immediate effect. Our contract states that they must give us 3 months notice in writing before they can stop our work.

I want to retain them as a customer and so will work with them on finding a solution but I also want to try and stay in business myself. Is Coronairus a Force Majeure event and does it make all of our contracts worthless at this point.

Our Force Majeure clause is
13. Force Majeure
1. Neither party shall be responsible to the other for any delay in performance or non- performance due to any causes beyond the reasonable control of the parties but the affected party shall promptly upon the occurrence of any such cause inform the other party in writing and thereafter take all action within its power to comply with these terms and conditions as fully and as promptly as possible.

If anybody cam help that would be great.
Thanks

[156651]

Our Force Majeure clause is
13. Force Majeure
1. Neither party shall be responsible to the other for any delay in performance or non- performance due to any causes beyond the reasonable control of the parties but the affected party shall promptly upon the occurrence of any such cause inform the other party in writing and thereafter take all action within its power to comply with these terms and conditions as fully and as promptly as possible.

That clause does not suggest that they can cancel the contract entirely for force majeure, but rather that if delay is caused because of "any cause beyond the reasonable control of the party" (e.g. they cannot get supplies due to coronavirus shutting borders) they need to tell you and then try their very hardest to comply with the contract - but you cannot sue them for damages if they fail to comply with the contract. Not sure why they think coronavirus means they can no longer perform under the contract - presumably their obligation is to pay for any leads generated?

What do the termination provisions say?

I think they might be pulling a fast one, but hard to say without reviewing the full contract.

[Audicab]

156651 said:

Our Force Majeure clause is
13. Force Majeure
1. Neither party shall be responsible to the other for any delay in performance or non- performance due to any causes beyond the reasonable control of the parties but the affected party shall promptly upon the occurrence of any such cause inform the other party in writing and thereafter take all action within its power to comply with these terms and conditions as fully and as promptly as possible.

That clause does not suggest that they can cancel the contract entirely for force majeure, but rather that if delay is caused because of "any cause beyond the reasonable control of the party" (e.g. they cannot get supplies due to coronavirus shutting borders) they need to tell you and then try their very hardest to comply with the contract - but you cannot sue them for damages if they fail to comply with the contract.

What do the termination provisions say?

Thanks for that, our termination clause is

5. Term and Termination
1. The contract is ongoing with a three-month cancellation notice. The three-month cancellation clause can be invoked at any point after the first 6 months. No notice can be given until 1st August 2018.
2. Once the cancellation notice has been given the 3 three months will run from the end of the month the cancellation is given in.
Example
If three months’ notice is given in writing on the 23rd August, the contract will run until 30th November.
3. All fees owed / agreed should be paid in full before any termination of any project or monthly contract.
4. Without Prejudice to any other remedies available, either party shall be entitled to terminate the Agreement by giving 90 days written notice of termination to the other if:
a) The other commits a material breach of the Agreement which, in case of a breach capable of remedy, shall not have been remedied within 14 days of the receipt of the other of a notice identifying its breach and requiring its remedy. Upon remedy, the party in breach shall provide proof of remedy within 10 days thereof; or
b) If the other party passes a resolution for winding up ( other than for the purpose of a solvent amalgamation or reconstruction) or it shall cease or threaten to cease to carry on its business of substantially the whole of its business or becomes or is declared insolvent, bankrupt or convenes a meeting of or proposes to make any arrangement or composition with its creditors or if a liquidator administrator, receiver or trustee or similar officer is appointed over the assets of it or any analogous step is taken in connection with insolvency or dissolution.

[Hitch]

Audicab said:

Neither party shall be responsible to the other for any delay in performance or non- performance due to any causes beyond the reasonable control of the parties

CV is a cause beyond the reasonable control of your clients. For what it's worth this clause, particularly the 'any causes' part provides your clients with a massive get out on issues which would not normally be considered FM. FM is often detailed as a list of what is and is not expressly included.

Audicab said:

but the affected party shall promptly upon the occurrence of any such cause inform the other party in writing and thereafter take all action within its power to comply with these terms and conditions as fully and as promptly as possible.

They have informed you. The requirement to 'take all action within it's power' is something of a loop back to them claiming FM, unless your T&Cs elsewhere detail actions they need to take in the event of FM, particularly around termination.

I'm not a lawyer so please take advice but I have been a Board level Commercial Director in very big firms for what that's worth. My focus now would be on offering them a holiday of 2-3 months to keep the business as sensible heads will return once we get through this ramp-up period.

[156651]

Hitch said:

Audicab said:

Neither party shall be responsible to the other for any delay in performance or non- performance due to any causes beyond the reasonable control of the parties

CV is a cause beyond the reasonable control of your clients. For what it's worth this clause, particularly the 'any causes' part provides your clients with a massive get out on issues which would not normally be considered FM. FM is often detailed as a list of what is and is not expressly included.

This may be true, but it is not clear to me why coronavirus means they cannot comply with their obligations under their contract. OP - what are their obligations, is it simply to pay for leads generated? I think they would struggle to argue that their business making less money due to coronavirus means they can use a force majeure clause to stop paying you. Certainly they do not appear to have the right to cancel without notice.