On 12 March 2020, the World Health Organization declared Covid-19 a pandemic. Almost two years later, Aotearoa New Zealand is facing, for the first time, large numbers of Covid-19 cases in the form of the Omicron variant.
With Omicron now firmly in our community and with cases continuing to rise, contractual parties are starting to face real difficulties in the performance of their contractual obligations.
Clients are turning to the terms of their contract with a view to identifying any contractual mechanisms that excuse non-performance, such as force majeure or material adverse change clauses.
The types of issues to consider when faced with non-performance challenges arising from Covid-19 are covered in Lauren Lindsay and Sally Trafford’s New Zealand Chapter on Force Majeure and Hardship in the book Force Majeure and Hardship in the Asia Pacific Region published in 2022 by Juris Publishing and edited by Harald Sippel and Kabir Duggal.
This timely book provides country reports on 17 jurisdictions across the Asia Pacific Region. It includes a detailed questionnaire for how unforeseeable and unavoidable events are managed in each jurisdiction.
Lauren and Sally’s chapter considers New Zealand law on force majeure and hardship, including recent decisions in the context of the pandemic “A mere declaration of force majeure”, they argue, “will not automatically excuse a party from non-performance.”
A contractual party must usually:
- provide notice of a force majeure event;
- identify, with suitable precision, the event in question;
- articulate those obligations that are affected by the event and, crucially, to what extent;
- consider alternative performance and mitigate non-performance as far as possible; and
- continue to perform non-affected obligations.
Unlike frustration of contract, where the contract will be automatically at an end regardless of notice, improper notice of a force majeure event can be fatal to reliance on a force majeure clause.
As the authors highlight, “every force majeure clause is drafted differently so that the scope and effect of any such provision will depend on the actual terms of the provision itself, together with the interpretation of the contract as a whole”.
Force Majeure and Hardship in the Asia Pacific Region is available to purchase here.
For any force majeure advice or more general advice on your contractual obligations, please get in touch with Lauren Lindsay.
“There is no comparable book out there, allowing the reader to get an understanding on force majeure and hardship from Vladivostok in the far North to Auckland in the South, all the way to Islamabad in the West.” – JURIS Arbitration Law