Force Majeure Clause In Purchase Agreement

- December 09, 2020

Comment: This language of example is provided for parties who enter into contracts in the middle of the Covid 19 pandemic who want to ensure that current circumstances are not considered force majeure events at the time of execution. Given that the governors of California, Connecticut, Illinois, New York, Louisiana, New Jersey, Ohio and Puerto Rico have mandatory segregation orders, an order to deport the state should not trigger a case of force majeure. But the government`s shutdown, the suspension of mortgage programs for agencies or the closure of offices necessary to register documents or financial markets are currently impossible to predict. The doctrine of general law frustration may be available if a GSP does not contain a force majeure clause, but the buyer nevertheless hopes to withdraw its purchase agreement. Frustration arises when a situation has arised where the parties have not made arrangements in the contract and the performance of the contract is “totally different from that of the contract”. As in the case of a case of force majeure, the fact that an obligation has become heavier or more costly is not a frustration. For example, in one case in 2017, a new tax was introduced between the signing of the GSP and the deadline, resulting in an increase in the transfer tax from $58,040 to $458,240. The buyer`s argument that the increase would have thwarted the contract was rejected. In another case, the 2019 tax, a new tax affected the buyer`s ability to sell his own property and thus obtain the necessary funds to purchase it. The purchaser`s argument that the contract is frustrated by its inability to obtain financing was also rejected. The real solution is not the widespread inclusion of the pandemic in a force majeure plate wash list, because the next unexpected event could be something else. Instead, parties should imagine how unexpected events could affect their specific contracts and adapt force majeure contracts that meet their individual needs.

Contracts for the sale and sale of LNG generally include obligations arising from the force majeure event that the parties wish to consider. These provisions may include:6 A force majeure provision generally contains explicit requirements to reduce adverse performance by examining alternative service providers: in general, we can consider that the use of a case of force majeure will only be successful if significant efforts have been made to exploit other benefit opportunities. , including other sources of supply, transportation routes, etc. We examine whether the eruption of Covid-19 and related government actions are likely to constitute force majeure events in project contracts that are generally the cornerstone of project financing operations, such as construction contracts, contracts to purchase and sell natural resources, and contracts to purchase electricity.

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