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Question

Is there a legal test or standard that would apply to help figure out if Force Majeure applies or not?

A test that would determine if a company is trying to escape an unfortunate contract out of convenience, or true inability to fulfill obligations?

Or can a company simply "declare" Force Majeure and cancel contracts they don't like?

Background

A company has a multi-year contract with a service provider.
Yet, the provider is seeking to cancel the contract early, citing Act Of God / Force Majeure due to the Covid Pandemic.

Admittedly, the pandemic has increased their costs and made their work more difficult. But it is unclear that it is bad enough to invalidate a contract. The change in circumstances might make contract unprofitable to them, or inconvenient to carry out. But that is always a risk of contracts, right?

As evidence that the contract should still be in place and enforceable, the company got bids from competitors who offered similar prices (sometimes even slightly cheaper), and a new multi-year term starting now (when the pandemic risks are now well known and obvious)

Thoughts

I believe that if another company can offer a similar service at a similar price, then the contract is still enforceable.
I believe that "Force Majeure" would require that No Reasonable Company could possibly be expected to fulfill the terms of the contract under unforeseen circumstances.

But, that is just my opinion.

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  • Real-world legal questions should be directed to lawyers, not this site.
    – user36183
    Mar 26, 2021 at 14:49
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    The scenario that inspired the story is real-world, but I think the question is valid in general: What sorts of tests might be applied to Force Majeure claims?
    – abelenky
    Mar 26, 2021 at 15:05
  • Does this answer your question? Is there any point in having Force Majeure in a contract? While the linked question is phrased differently, it did attract an answer which answered your question. Namely, "default legal rules can change over time and place."
    – grovkin
    Mar 26, 2021 at 16:49
  • @grovkin: I do not think that is what I'm asking. F.M. is in this contract (although does not specifically mention pandemics), and the service provider has invoked it. Although the company disputes that a significant enough event to cancel a contract has happened. If this is taken to Arbitration or Court, what tests might a judge use to decide if F.M. applies??
    – abelenky
    Mar 26, 2021 at 18:43
  • It may not be an answer you like to hear, but it is an answer to your question. It asserts that there is no universal standard. And in the absence of a universal standard, Colins's comment would really be the answer. A lawyer familiar with a particular jurisdiction would have to be consulted. If there is no law in the jurisdiction covering this clause, then the answer would be whether a court would accept the argument that you are putting forward. And estimating the odds of prevailing in court is what lawyers are paid to do.
    – grovkin
    Mar 26, 2021 at 22:29

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