Force Majeure Clauses, Covid-19 and your contractual obligations
In the face of the COVID-19 pandemic, many Canadian businesses have struggled to resume normal operations and meet their contractual obligations under commercial agreements. In Ontario and several other provinces, states of emergency and public health restrictions significantly disrupted supply chains, staffing, and access to premises.
These disruptions raise important legal questions: What happens if you cannot fulfil your existing contractual obligations? And what does this uncertainty mean when you are negotiating new contracts?
This article examines how force majeure clauses may apply to commercial contracts affected by COVID-19 and similar unforeseen events.
What Is a Force Majeure Clause?
A force majeure (FM) clause is a contractual provision intended to address extraordinary events often referred to as “acts of God” that are beyond the control of the contracting parties and were not anticipated at the time the agreement was entered into.
Typically, a force majeure clause applies where:
- The event is outside the reasonable control of the affected party
- The event was not caused directly or indirectly by that party’s fault or negligence
- The event prevents or delays the performance of contractual obligations
Most force majeure clauses expressly exclude financial inability as a valid excuse for non-performance, meaning obligations such as rent or loan payments are often still enforceable.
Importantly, force majeure clauses usually contain strict procedural requirements, including notice provisions and timelines that must be followed to obtain relief.
Does COVID-19 Qualify as a Force Majeure Event?
Not all force majeure clauses specifically list “pandemic” or “epidemic” as qualifying events. However, even if COVID-19 is not expressly mentioned, relief may still be available depending on how the clause is drafted.
A careful contract review is required to determine:
- Whether COVID-19 falls within the clause’s wording
- Whether any exclusions apply
- Whether the legal test for invoking force majeure has been met
Related blog: Doctrine of Frustration, COVID-19, and Your Contractual Obligations
The Legal Test for Invoking Force Majeure
Courts generally apply a two-part analysis when determining whether force majeure relief is available:
1. Impossibility of Performance
The affected party must demonstrate that COVID-19 or related government restrictions actually made performance impossible, not merely more expensive or inconvenient.
2. Unforeseeability and Lack of Control
The event and its consequences must not have been reasonably foreseeable at the time the contract was signed, and the event must be wholly outside the control of the party seeking relief.
A party cannot rely on force majeure if its own actions or failures contributed to the inability to perform.
Mitigation and Preventive Obligations
Many force majeure clauses impose additional obligations before relief is granted. These may require the affected party to:
- Take reasonable steps to prevent or limit the impact of the event
- Implement mitigation measures to resume performance where possible
In the context of COVID-19, mitigation efforts may include:
- Implementing quarantine or workplace safety protocols
- Enabling remote work arrangements
- Adjusting operations to comply with public health orders
Some courts may also consider the availability of government relief programs as part of the mitigation analysis.
Government Relief Programs as a Relevant Factor
During the pandemic, federal programs such as the Tourism and Hospitality Recovery Program and the Hardest-Hit Business Recovery Program were introduced to assist affected businesses.
While access to these programs does not automatically bar force majeure relief, courts may examine whether reasonable steps were taken to access available support.
Read more: Government of Canada – COVID-19 Business Assistance
How Courts May View COVID-19 Force Majeure Claims
Although courts are likely to recognize COVID-19 as an unforeseeable event beyond the control of contracting parties, the key issue will often be whether performance was truly impossible or merely delayed.
In many cases, courts may find that contractual obligations were suspended rather than extinguished.
Practical Guidance for Businesses
If you are uncertain whether:
- Your contract includes a force majeure clause
- COVID-19 qualifies as a force majeure event under your agreement
- You have complied with the required notice and mitigation steps
Seeking legal advice early can help prevent disputes and preserve your rights.
If your business has been affected by COVID-19 or another unforeseen event and you are unsure about your contractual obligations, Kalfa Law Firm can help you assess your options.
Contact Kalfa Law Firm for strategic advice on force majeure clauses, contract interpretation, and risk management.
FAQs:
-Ghazal Hamedani, Associate Lawyer
Ghazal’s practice is focused on corporate-commercial law, including business formations, corporate reorganizations, shareholder agreements, commercial contracts, the purchase and sale of businesses, as well as secured and unsecured lending transactions. After graduating from University of Toronto with distinction, Ghazal completed her law studies with honours at Cardiff Law in 2017. Ghazal is a lawyer licenced to practice law by the Law Society of Ontario. She is also a member of the Canadian Bar Association and Canadian Corporate Counsel Association Ontario.
© Kalfa Law Firm 2020. Updated July 2026
