Legal Issues Tsunami in the Wake of COVID-19 and Contractual Breach

As the COVID-19 pandemic rages through the world, a “tsunami” of legal and economic issues including breach of contracts occurred in the private and public sectors. In Iran and throughout the world, almost all contracts contain so-called “force majeure” clauses, which excuse a business’s non-performance if circumstances beyond their control prevent (or sometimes hinder) performance. These clauses often list out the circumstances which excuse non-performance and they may include flood, fire, terrorism, war “Act of God” and sometimes epidemic. Due to the impacts of the pandemic on the price of materials and tremendous increase in the costs, contractors try to take COVID-19 as a legal excuse (force majeure) to breach the contract. The present paper tries to answer the questions that can the contractors take force majeure as a “get out of jail free” card? Does the COVID-19 outbreak constitute force majeure and excuse non-performance of contract? And how does it affect “time of Essence” clauses in contracts? Through the critical analysis method, this article scrutinizes the legal challenges of the issue. Findings show that having a look ahead, the legislator has to redefine the meaning of force majeure in the Iranian and European law