Contractors Entitled to Force Majeure Clause Over COVID-19

EghtesadOnline: The delay or non-performance of contractors in fulfilling their obligations due to the outbreak of coronavirus is acceptable and expenses resulting from delays, workers’ wages and machinery shall be borne by the employer, the Plan and Budget Organization announced.

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20 April 2020

The PBO statement came in response to correspondence undertaken by Masoud Khansari, the head of Tehran Chamber of Commerce, Industries, Mines and Agriculture, to President Hassan Rouhani on whether the coronavirus could be ascertained as “force majeure”, Tccim.ir reported.

According to Financial Tribune, force majeure clauses are contractual provisions that alter parties’ obligations and/or liabilities under a contract when an extraordinary event or circumstances beyond their control prevent one or all of them from fulfilling those obligations.

Depending on their drafting, such clauses may have a variety of consequences, including: excusing the affected party from performing the contract in whole or in part; allowing a party’s delayed performance, entitling them to suspend or claim an extension of time, or giving that party a right to terminate.