The question of almost every party to a contract that remains to be fully performed is whether Covid-19 is an act of God that will excuse performance by the party who has yet to complete performance. The starting point in any such inquiry is the written agreement between the parties-assuming there is a written agreement. If there is no written agreement, the question is whether the law provides for a defense of “act of God” or, more formally, force majeure.
Force majeure provisions in written agreements frequently characterize epidemics as acts of God that excuse performance. It is the unwritten agreements and the written agreements that do not contain a force majeure provision that compel reliance on Florida law. In 1944, the Supreme Court of Florida in the case of Florida Power Corp. v. City of Tallahassee defined an act of God event as one that will excuse performance of a contract by a party whose performance is not yet complete. The event
must be an act or occurrence so extraordinary and unprecedented that human foresight could not foresee or guard against it, and the effect of which could not be prevented or avoided by the exercise of reasonable prudence, diligence, and care or by the use of those means which the situation of the party renders it reasonable that he should employ. It must be the sole proximate cause of the nonperformance, without the participation of man, whether by active intervention or negligence or failure to act.
It is beyond question that the current pandemic categorically exists as an act of God that could excuse the performance of a contract. The pandemic could not have been avoided by the parties nor could it have been foreseen. Seemingly, the cases will turn first on what is the nature and character of the unfinished performance; then on whether the pandemic was the sole cause of a party’s nonperformance.
At issue is what the Florida courts will do in cases involving rental contracts and commercial leases, construction contracts, supply contracts and every other kind of contract in which performance by one party is incomplete and has been interfered with or interrupted by Covid-19. Will the courts extend the time for performance by the party from whom performance is due? Or, will the courts declare the contract at an end and find the defaulting party not liable for the other party’s financial injury?
What does your contract say about force majeure or acts of God? For a consultation call Payton & Associates, LLC at our office.