Is COVID-19 an “Act of God” under Tennessee Law?
COVID-19 is wreaking havoc. As the world scrambles to slow its spread, many companies are unable to perform basic contractual obligations. From “shelter in place” or “safer at home” orders, which require the temporary closure of all non-essential businesses, to the cancellation of large events like concerts, sporting events, and conferences, the attempts to suppress COVID-19 are creating substantial uncertainty.
One potential defense for non-performance is that COVID-19 qualifies as a force majeure event or “Act of God.”
One potential defense for non-performance is that COVID-19 qualifies as a force majeure event or “Act of God.” Force majeure means “superior force” and refers to events that are generally unforeseen, unpredictable, or uncontrollable. Many written contracts contain explicit force majeure clauses, which list situations for which performance is excused. If the clause in your contract explicitly mentions epidemics, pandemics, or a national emergency, then the case should be relatively simple: you just need to show that the non-performance was unavoidable, solely caused by COVID-19, and necessary despite a good faith effort to mitigate its impact. Be sure to review the contract carefully to see if any particular notice is required.
Even if your contract lacks this language, you can argue that non-performance is excused due to an “Act of God.” Under Tennessee law, an Act of God occurs when a disrupting event “happens by the direct, immediate, and exclusive operation of the forces of nature, uncontrolled or uninfluenced by the power of man and without human intervention.” Unfortunately, the Tennessee case law on Acts of God is sparse, and typically involve the weather. Taken literally, this rule could mean that COVID-19 is not an Act of God because its consequences could have been prevented by extreme foresight by governments. But although a series of early government interventions could have arguably stopped the situation, your company could not have stopped it. In other words, the spread is not your fault, so shouldn’t you be able to invoke the defense?
Is COVID-19 an Act of God under Tennessee law? The short answer is we don’t know, and arguments can be made both ways. The courts will have to decide.
But even if COVID-19 is ultimately found not to be an Act of God, you have other potential defenses: the doctrines of impracticability, impossibility, frustration of purpose, and illegality, any of which could arguably apply in a particular case.