Coronavirus – not force majeure in public contracts

The Danish Agency for Governmental Management has issued a news release announcing that coronavirus (COVID-19) generally does not create a situation entitling the State to claim force majeure against its private-sector suppliers.

Several suppliers to the public sector are probably considering whether the COVID-19 outbreak may qualify as a force majeure event.

However, the Agency for Governmental Management – an agency under the Danish Ministry of Finance – has issued a news release announcing that COVID-19 is generally not considered to constitute a situation entitling the State to claim force majeure against its private-sector suppliers.

The State’s obligation under most procurement contracts is to pay for the goods and services purchased. The decision to instruct all central government employees to work from home does not prevent the State from doing this. According to the Agency for Governmental Management, the State is therefore obliged to fulfil its obligations as a general rule. This also applies even if the State informs the supplier that an agreed delivery should not take place or requests that it be postponed to a later date. Given these circumstances, the postponement of the delivery time at the request of the State does not per se imply that the State is not obliged to pay the supplier.

The Agency for Governmental Management further states that the above principle is considered not only to apply to the State, but also to the other parts of the public sector, i.e. regions, municipalities, etc.

Read the news release from the Agency for Governmental Management

Please also read Plesner’s previous Insight about force majeure claims in commercial contracts

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