Close

Force Majeure Clause In License Agreement

Licensors and licensees should now review their agreements to determine the possible applicability of force majeure clauses to current licensing agreements. Force majeure literally means “greater violence.” These clauses relieve a part of the liability when an unforeseen event outside the control of that party prevents it from fulfilling its obligations under the contract. Typically, force majeure clauses include natural disasters or other “force majeure”, war or the inability of third parties – such as suppliers and subcontractors – to fulfil their obligations to the party. It is important to remember that force majeure clauses should only excuse a party if the non-compliance could not be avoided by that party`s exercise of due diligence. If an unforeseen event occurs, a tenant can rely on section 56 above and claim that the outbreak of the coronavirus and the resulting blockage, ordered by the government, is a force majeure event that was beyond their control. What steps do you need to take to invoke the force majeure provision? Some force majeure provisions require you to attempt to take certain steps – in particular to inform the other party in some way or form – before invoking the provision to excuse the performance. Other provisions may still require the parties to meet and consider possible ways to mitigate the effects of the force majeure event, namely to make “appropriate” efforts to ensure performance. This principle is called the “doctrine of frustration.” While the above clause does not explicitly mention a “global pandemic” among the events leading to excusable non-compliance, now that the WHO has classified “COVID-19” as a global pandemic and the U.S. federal government has adopted a national “state of emergency,” there is no doubt that the language of the clause of “and other causes that cannot be overcome or avoided” covers global pandemics…