P2P

22 P E E R T O P E E R : I L T A ' S Q U A R T E R L Y M A G A Z I N E | S U M M E R 2 0 2 0 There were a few notable exceptions: (i) leases had the lowest instances of pandemic-specific language with only one instance out of the sixty-eight lease samples (1.5%), and (ii) utilities had the lowest instances of both "government action" (28%) and "act of God" (48%). These percentages were 57% and 75%, respectively, in the overall sample set. We note that our sample revealed a general increase in the inclusion of pandemic-specific language in force majeure clauses over the past 18 years. 2 What is Excused? Force majeure clauses generally excuse performance by the party impacted by the force majeure event. In most jurisdictions, it is the nonperforming party that bears the burden of proving that the event was beyond the party's control and without its fault or negligence. The breadth of what contractual obligations are excused, however, is not always clear. The parties may debate what performance is required, if any, and whether the entire contract is essentially null and void. Those answers depend in large part on the contract language and the law of the jurisdiction governing the contract. Note that parties also must consider other defenses to performance that may impact the rights of the parties in the event of a force majeure-like event, whether or not the contract's force majeure provision covers such an event and even where the contract does not include a force majeure provision. For contracts involving the sale of goods, under the Uniform Commercial Code (UCC), suppliers may raise the doctrine of excuse 3 . Other defenses a non-performing party may raise include the common law doctrines of impossibility and frustration. Under impossibility and frustration, similar to the UCC, a party is excused for performance because of the occurrence or non-occurrence of an event contrary to a basic assumption of the contract. Unlike the UCC, however, under impossibility and frustration, the party failing to perform does not have an explicit obligation to allocate resources or give prior notice of its expected non-performance. Because these doctrines are part of a state's common law, case law may impose these and other obligations before asserting such a defense. Conditions to Exercising Relief Standard force majeure clauses require the impacted party to (i) give notice, usually within a certain period of time after the occurrence of a force majeure event; (ii) provide detail regarding the nature of the force majeure event and anticipated duration; and (iii) mitigate the impact and duration of the force majeure event, often including partial performance. Remedies Upon the Occurrence of a Force Majeure Event Assuming the trigger event occurred, the most common remedy is the other party's right to terminate the contract, sometimes after a specified period of time. Alternative remedies may include the right to adjust or otherwise F E A T U R E S

• Cover