Few courts have ruled, to date, on claims that the pandemic itself and the response of civil authorities to it constitute sufficiently unforeseeable circumstances to nullify contracts and excuse nonperformance. These arguments have ample visceral appeal but cannot be reconciled with the last 15 years of current events and well-established precedent. Although the specific emergence and mechanism of the COVID-19 pandemic may have been unforeseen, the possibility of widespread pandemic and economic disruption was anticipated by the medical, legal and risk-management communities. Unless courts choose to overtly recognize a "COVID-19 exception," well-established legal precedent in most jurisdictions accordingly require rejection of arguments that delay due to the current pandemic was sufficiently unforeseeable to justify nonperformance absent an applicable force majeure clause.

The World Health Organization declared COVID-19 a pandemic as early as March 11, and predicted that the number of cases, deaths and affected countries would continue to climb. Dr. Tedros Adhanom Ghebreyesus, World Health Organization, "Opening Remarks at the Media Briefing on COVID-19" ("We have … made the assessment that COVID-19 can be characterized as a pandemic.")

Civil authorities thereafter began to impose restrictions on travel, commercial enterprise and overall gathering to address the manifest threat that the spread of the virus would continue to accelerate and overwhelm the health care infrastructure. See, e.g., "A List of What's Been Canceled Because of the Coronavirus," (UPDATED)" New York Times. These measures, when rigorously enforced, slowed the spread of the contagion and limited the number of fatalities, but resulted in disruptions in the business community on a scale not encountered for generations.

Force majeure clauses set forth the agreement of contracting parties to alter their obligations in response to subsequent triggering events that can neither be fully anticipated or controlled. These clauses thereby literally protect the parties against "the effect of a power which cannot be resisted." See Viterbo v. Friedlander, 120 U.S. 707, 728 (1887). These provisions typically permit the parties to define conditions that will excuse performance and thereby supersede judicial interpretation of whether extraordinary events, so-called "acts of God," will suffice.

Most jurisdictions, including New York, subject such clauses to strict interpretation, see Kel Kim v. Central Markets, 70 N.Y.2d 900 (NY 1987). Consequently, a particular triggering event omitted from a list of events set forth in the agreement will not qualify. See Constellation Energy Services of New York v. New Water Street, 146 A.D.3d 557 (1^st Dep't 2017).

Thus, in In re Hitz Restaurant Group, 2020 Bankr. LEXIS 1470 (N.D. ILL Bank. June 2, 2020), the court agreed that the force majeure clause in a bankruptcy debtor's lease was unambiguously triggered by the Illinois governor's executive order that required closure of all in-restaurant dining due to COVID-19. The debtor restaurant remained obligated, however, to pay a portion of its rent because the debtor failed to demonstrate that its operations were rendered impossible, given its ability to offer curbside pick-up of food while its dining room remained closed.

Similarly, the U.S. District Court for the District of Hawaii recently denied a motion for summary judgment that attempted to rely on a force majeure clause to compel an event planner to refund previously tendered payments. In NetOne v. Panache Destination Management, 2020 U.S. Dist. LEXIS 99089 (D. HI June 5, 2020), the court acknowledged that travel and other restrictions arising out of Hawaii's efforts to prevent the spread of COVID-19 made the event that the plaintiff had pre-paid unfeasible. The court further noted, however, that the force majeure clause contained in the written agreement between the parties failed to specify that the nonterminating party must return all deposits in the event of a triggering event.

In many jurisdictions, if an express agreement lacks an applicable force majeure clause, impossibility of performance may nonetheless excuse a party's failure to perform its contractual duty. See Facto v. Pantagis, 390 N.J. Super. 227 (N.J. App. Div. 2007) (power failure during wedding reception). To invoke this defense, however, the change in circumstances must be unforeseeable. Moreover, "impossibility occasioned by financial hardship does not excuse performance of a contract." See Urban Archaeology v. 207 E. 57^th St. LLC, 68 A.D.3d 562, 562 (1^st Dep't 2009) (citing 407 E. 61^st St. Garage v. Savoy Fifth Ave., 23 N.Y.2d 275, 281-282 (NY 1968)). The consequences of the triggering events must be unforeseeable at the time of contracting for performance to be excused.

COVID-19 was not, however, the first pandemic of the 21st century. Severe Acute Respiratory Syndrome (SARS), and its pathogen, SARS-CoV, was identified as a novel coronavirus after first being isolated in Guandong, China in November 2002. Michael  B.A. Oldstone, "Viruses, Plagues, & History," (Oxford Univ. Press 2010) at p. 227-28  (citing M.M. C. Lai et al., "Coronavirade," in Fields Virology, (5^th ed.), ed. D. Knipe et al., p. 1305 (Philadelphia 2007) ("Oldstone"). RNA genetic mapping clarified that the virus originated in markets trading in game, including bats and bat products. Three distinct species of horseshoe bat were ultimately implicated as the natural reservoir for SARS. .

A Canadian woman visiting Hong Kong became exposed to SARS-CoV. She returned to Toronto and died. Her son, who assisted with her care, developed trouble breathing and passed the virus along to other individuals in the waiting room in the hospital where he sought care. The subsequent spread of the virus prompted WHO to respond with an advisory quarantine applicable to the city of Toronto. See, Thomas Svoboda, "Public Health Measures to Control the Spread of the Severe Acute Respiratory Syndrome During the Outbreak in Toronto." N. Engl. J. Med. 350 (2004): 2352 ("Svoboda").

The economic consequences of the quarantine for the Toronto business community were catastrophic, but the measure prevented the further spread of SARS. The event brought international attention to the reality that in addition to morbidity and mortality over a wide geographic area, "pandemics … cause significant economic, social and political disruption … [and] evidence suggests that the likelihood of pandemics has increased … because of increased global travel and integration." Nita Madhav et al., "Pandemics: Risks, Impacts and Mitigation", in Disease Control Priorities: Improving Health and Reducing Poverty (3d ed.), D.T. Jamison, ed., (The Int'l Bank for Reconstr. and Dev't/The World Bank) (2017), at https://www.ncbi.nlm.nih.gov/books/NBK525302/ (last accessed Jul 20, 2020) (Madhav).  Concerns regarding the mechanism to prepare for the future consequences of novel pathogens were heightened by the subsequent emergence of the H1N1 and H5N1 strains of influenza virus. R. Evans, Preparedness and Response Paralysis: Ramifications for Pandemic Planning, 6 U. St. Thomas L.J. 594, 608 (2009). See also Joseph P. McMenamin, "Pandemic Influenza: Is There a Corporate Duty to Prepare?", 64 Food & Drug L.J. 69 (2009). Outbreaks of Ebola similarly resulted in widespread containment precautions and disruptions that stretched from Africa to New Jersey.

The risk-management industry's subsequent response followed two paths. New products were developed to offer coverage for pandemic-related business interruption. New exclusions were also developed to permit future policies to clearly bar coverage of claims arising out of the economic consequences of epidemics. See Russ Banham, "This Insurance Would Have Helped In Coronavirus Crisis But Nobody Bought It," Insurance Journal, April 3, 2020, at https://www.insurancejournal.com/news/national/2020/04/03/563224.htm.

Subsequent to SARS, increased monitoring of emerging pathogens also identified a series of infectious agents with the potential for pandemic spread. WHO developed a multi-phase assessment metric while the CDC promulgated risk bulletins in response to Ebola, new influenza strains, and other illnesses. Action plans were moreover developed at multiple levels of local, State and federal government. Hand sanitizer stations became ubiquitous in ever building lobby.

In this context, the business and legal community overall lost the ability to claim that the emergence of a pandemic was unforeseeable. From a traditional legal perspective, this awareness established a potential obligation to allocate risk in legal agreements or face potential consequences for breach in the event of nonperformance.

The paramount need to protect the ill, save lives and attempt to slow the spread of the COVID-19 pandemic, required measures that resulted in widespread commercial disruption. The written agreements relied upon by broad segments of the business community lack express provisions, such as force majeure clauses, applicable to these conditions. It seems unlikely that the business community will disregard this foreseeable risk in the future.

William H. Grae is a partner at Chartwell Law whose practice includes litigation defense with a primary focus on personal injury liability defense. He has a broad range of trial and appellate experience in this area and has worked on behalf of insurers and self-insured entities in state and federal courts throughout New York and New Jersey.