With the COVID-19 pandemic affecting the commercial sector, companies have begun to declare force majeure to excuse their failure to perform their contractual duties.
A South California-based real estate investment group has cited the novel coronavirus as an act of God in its lawsuit against Exxon Mobil, Reuters reports, citing court filings.
Pacific Collective LLC is said to be claiming that California’s statewide lockdown has prevented in from acquiring a $4.2 million property from Exxon Mobil, the world’s largest publicly-traded oil and gas company.
The investment fund is citing the lockdown using a force majeure provision, which is also known as the “act of God” clause. It deals with unforeseen and uncontrollable events which make it impossible for a party to meet its contractual obligations.
Pacific Collective reportedly invoked the clause on 30 March, a day before the acquisition was supposed to be completed. According to the complaint, Exxon then moved to cancel the deal, saying that it would keep the fund’s deposit.
The complainant is now seeking $7.9 million in damages for alleged breach of contract and a court injunction to stop the property from being sold to another buyer.
In February, China’s CNOOC became the first major energy company to declare force majeure in response to the COVID-19 pandemic. The country’s largest LNG importer sought to reduce deliveries from at least three major suppliers for February and March, as the infection, which has since made close to 1.5 million people sick worldwide, caused a sharp drop in oil demand.
BP this month issued a force majeure notice to excuse a one-year delay on a floating liquefied natural gas facility off West Africa, and three Indian refiners as well as several ports have invoked the same clause in rejecting crude and gas imports.