COVID-19: Excused and Delayed Performance Clauses | Practical Law
The outbreak of the 2019 novel coronavirus disease (COVID-19) has engulfed the world. Canada has not been spared. The onset of the pandemic has sparked a worldwide re-examination of contractual provisions allowing excused or delayed performance arising from disruption of the supply chain. These clauses fall into three broad types. One is a force majeure provision allocating the risk of unforeseen or remote contingencies such as a pandemic. A second is time of the essence provisions. The third type of clause is a termination trigger where there is a delay outside the control of the terminating party, and it exercises its right to terminate the contract. This Practice Note considers, primarily from a Canadian common law perspective, how these clauses have been interpreted and applied in Canada. Businesses should not assume that it is easy to invoke the outbreak of COVID-19 as an excuse for non-performance or late performance.