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Interpreting Force Majeure and Material Adverse Change Clauses in the Wake of COVID-19

Edward Buthusiem, Briannon Irwin, and Ryan Brubaker

April 7, 2020

The novel coronavirus (COVID-19) pandemic is straining the global economy as governments implement increasingly stringent restrictions on daily activities, and, as a result, a sense of uncertainty is pervasive among investors. These economic concerns have burdened businesses in nearly every sector, presenting companies with new challenges to solvency and profitability—and little time to prepare.

The highly fluid nature of the pandemic and the attendant closure of many businesses, government offices, and public spaces has given rise to complications and—in some cases—an inability to fulfill contractual obligations. Parties are seeking to invoke the pandemic to enforce force majeure and material adverse event (MAE) contractual provisions to excuse contractual performance. Thus, it is more important now than ever before to consider thoroughly how the current economic and public health landscape could interfere with contractual assignments of risk and traditional avenues for recourse.

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Edward J. Buthusiem

Managing Director

Washington, DC