Swine flu could be made an excuse for breach of contract

The number of people off work due to illnesses is three-times higher than normal for the time of year which has had inevitable knock-on effects on businesses. The swine flu pandemic could result in businesses struggling to cope with its contractual obligations due to missing staff. But how can a business reduce the risk of legal claims arising from a breach of contractual duty?

One approach is to include a “force majeure” clause in the contract. A force majeure clause will temporarily free both parties from liability or obligation for the duration of an event that is beyond the control of the parties, such as a flood or earthquake or other “act of God”. However, the clause tends to be used in the context of war and therefore it is yet to be seen whether the courts will treat swine flu as an “act of God”. Whether an illness can justify a force majeure clause could depend on the way in which the government treats the disease and whether it sees it as a minor occurrence or as a pandemic.

Businesses and institutions who are concerned that swine flu or other extraordinary events will affect their ability to meet contractual obligations should check their contracts for a force majeure clause. Such clauses are common in commercial contracts such as IT services.

Businesses and institutions should review their contracts and decide whether they feel a force majeure clause is necessary in their contract.

A well written and professionally drafted clause is essential in order for it to be effective. Legal advice should be taken when introducing a force majeure clause into your contract.

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