Force majeure is defined as “unforeseeable circumstances that prevent someone from fulfilling a contract.”
If ever there was circumstances to invoke the business clause, Covid-19 is it.
Wisely taking the latter into consideration, China has issued more than 1,600 force majeure certificates to shield companies from legal damages arising from the novel coronavirus disease outbreak, China Daily reported.
The China Council for the Promotion of International Trade (CCPIT) has issued 1,615 certificates by last Friday for companies involving over 30 sectors, covering a total contract value of 109.9 billion yuan (about US$15.7 billion), said the CCPIT.
As explained previously, the certificate exonerates companies from not performing or partially performing contractual duties if they are suffering from circumstances beyond their control, the report said.
The Covid-19 epidemic has delayed production for some companies as quarantine measures held back many workers from returning to their posts, the report said.
Some firms have presented the certificate to their clients and agreed on a later date to fulfill orders without facing legal liabilities, said the CCPIT.
A manufacturing company in eastern China’s Zhejiang province was the first to obtain the certificate on Feb 2 to excuse itself from breaching a 2.4-million-yuan overseas order that could incur 30 million yuan of compensation, the report said.
The CCPIT’s force majeure certificates are recognized by governments, customs, trade associations and enterprises of more than 200 countries and regions, the report said.
To minimize losses for foreign trade companies amid the outbreak, especially from contractual breaches, the Ministry of Commerce has instructed six trade associations in sectors like textile, mining, machinery and healthcare to help with legal counseling and applying for force majeure certificates.