The following excerpts are from the New York Chapter of the Force Majeure Global Guide Prepared by McDermott Will & Emery LLP, Published by ALM. For an in-depth conversation around this topic, please register for our Sept. 30 webinar "Does COVID-19 trigger force majeure? Navigating the legal and business issues" with international lawyer Lisa Richman for a discussion about the practical implications of force majeure in making business decisions state-by-state and across the globe.

1. How does COVID-19 affect contractual obligations?

In the wake of the COVID-19 outbreak, many businesses may find themselves unable to perform their contractual obligations, whether due to resulting economic uncertainty or actual impossibility. Businesses facing these issues should review their contracts to determine whether the circumstances resulting from COVID-19 provide any relief from their (or their counterparty's) performance obligations, for example, under a contractual force majeure provision. These provisions sometimes excuse performance for fires, floods, hurricanes, and other "Acts of God." Whether parties that have contracted under New York law can rely on force majeure to excuse performance depends on the terms of the contracts themselves as well as applicable law and facts.

1. How are force majeure provisions interpreted in New York? Is there a key case that should be considered?

In New York, a force majeure provision will excuse a party's performance only if the contract specifically lists the event that the party claims prevents performance or, in the case of a "catch-all provision," if the alleged force majeure event is of "the same kind or nature" of the specifically listed events. In addition, the claimed force majeure event must be unforeseen or due to circumstances beyond the control of the parties.

Parties should consider the Court of Appeals' decision in Kel Kim Corp. v. Central Mkts., Inc., 70 N.Y.2d 900 (1987), 1987 N.Y. LEXIS 19945. In Kel Kim, the Plaintiff Kel Kim Corporation leased a vacant supermarket from defendants for the purpose of operating a roller skating rink open to the public. The lease required Kel Kim to maintain an insurance policy. After Kel Kim received notice that its insurance policy would not be renewed by one carrier, Kel Kim attempted, but failed, to secure another policy that satisfied the lease's terms due to the liability insurance crisis at the time. The Court found that the claimed force majeure event — here the liability insurance crisis — was not the type of event contemplated by the force majeure provision in the parties' lease and affirmed the lower court's holding that Kel Kim had breached the contract. Other helpful cases to consider are Phibro Energy, Inc. v. Empresa De Polimeros De Sines Sarl, 720 F. Supp. 312, 318 (S.D.N.Y. 1989), 1989 U.S. Dist. LEXIS 10139, and In re Cablevision Consumer Litig., 864 F. Supp.2d 258, 264 (E.D.N.Y. 2012),  2012 U.S. Dist. LEXIS 43278.

1. What types of events qualify as force majeure in New York? Under what circumstances will an event not expressly described be considered a qualifying event?

Fires, floods, and other acts of God are generally listed as force majeure events. Depending on the language of the force majeure provision at issue, government action in response to COVID-19 (e.g., quarantines, shelter-at-home orders, travel restrictions, etc.) may constitute a qualifying force majeure event.