Over the past few weeks and months, Texas, the United States, and the world have felt increasingly devastating impacts from COVID-19, commonly known as the coronavirus. In addition to the dire health concerns, practical realities and government orders in numerous states (including “stay at home” orders) have had and will continue to have an effect on parties’ ability to perform under their contracts at all, much less in a timely manner and in accordance with all contractual provisions. This article reviews some basic tenants of Texas contract and commercial law that may affect a party’s obligations with respect to performance hindrances created by COVID-19—force majeure clauses and impossibility of performance.
Force Majeure Provisions: The Terms of the Contract Control
The terms of the contract should be the starting point for any analysis of the effect of COVID-19 on performance under a given contract. The parties should determine whether the contract contains a force majeure provision, which excuses non-performance of contractual obligations if the inability to perform is caused by some intervening, unforeseeable circumstance outside of the parties’ control, such as an act of God or war.
Most force majeure provisions contain a definition or list of specific events or types of events that trigger the force majeure provision, and often specifically include “epidemics” or “pandemics.” Texas law defines an epidemic as “the occurrence in a community or region of a group of illnesses of similar nature, clearly in excess of normal expectancy, and derived from a common or a propagated source.” Texas law defines a pandemic as “a global disease epidemic or an epidemic that crosses international borders and affects an extremely large number of people.” On March 11, 2020, the World Health Organization (“WHO”) officially declared COVID-19 a pandemic, and the Centers for Disease Control and Prevention (“CDC”) also refer to coronavirus a pandemic.
COVID-19 does qualify as an epidemic and a pandemic, but this is simply the first step. The specific terms of the force majeure provision must also be examined. The scope and effect of a force majeure clause depends on the specific contract language, which may differ from traditional definitions of the term force majeure. Some force majeure provisions contain exceptions, for example, providing that the unavailability of equipment or labor or the failure of performance by subcontractors do not constitute force majeure events. Texas courts generally enforce contractual provisions, including force majeure provisions, as written. “When the parties have themselves defined the contours of force majeure in their agreement, those contours dictate the application, effect, and scope of force majeure.” Texas courts are not at liberty to rewrite the contract or interpret it in a manner that the parties never intended. Texas courts “presume parties intend what the words of their contract say,” and interpret contract language according to its “plain, ordinary, and generally accepted meaning” unless the instrument directs otherwise. In particular, sophisticated parties are generally permitted to anticipate and allocate business risks between them, and those terms will generally be seen to be commercially reasonable.
Generally, force majeure provisions excuse performance but do not provide for affirmative relief. In other words, a party will typically not be held liable for failing to perform under the terms of the contract but will also not be entitled to additional costs or damages incurred due to the force majeure event. As always, the terms of the contract at issue will control exactly what relief the non-performing party is entitled to, if any.
IMPOSSIBLITY OF PERFORMANCE AND OTHER LEGAL RELIEF
If the contract does not contain a force majeure provisions or similar clause(s), a party’s non-performance may still be excused if the performance is deemed “impossible.” Under Texas law, a party’s performance may be excused when it is made impracticable or impossible by supervening circumstances. Courts often look to the foreseeability of the event causing the impossibility or impracticability, but this factor has more recently been deemphasized, and there are certain situations in which a court may still discharge a party of its obligations even when the event was foreseeable and, in fact, was foreseen. An impossibility may be caused by an impracticability that existed at the time the contract was created, but only if the non-performing party has no reason to know of the impracticability and that party assumed that the impracticability would not exist when it entered into the contract.
Texas courts have specifically held that “the performance of a contract is excused by a supervening impossibility caused by the operation of a change in the law . . . .” This interpretation could become relevant if executive orders or other instructions from governmental entities prevent performance or make performance impracticable. However, Texas law is clear that performance will not be excused simply because performance became more economically burdensome than anticipated. Additionally, if the impossibility was caused by the non-performing party’s voluntary act, performance will not be excused.
In addition to the doctrine of impossibility, “if performance is contingent upon the continued existence of a state of things or set of circumstances, a condition is implied that the cessation of existence of such state of things excuses performance.” The non-performing party must show (1) an unexpected contingency has occurred, (2) the risk of that contingency was not allocated to either party by agreement, and (3) the occurrence of the contingency has made performance impossible.
Texas law provides several avenues of relief for parties who find it impracticable or impossible to perform their contractual obligations during the COVID-19 pandemic, starting with the contract itself. If a party believes that it may be entitled to relief under its contract or the law, it should contact and notify the other party(ies) as soon as possible and comply with any applicable contractual provisions regarding formal notice. Communication and documentation will be key during this unprecedented time. Each contract and factual scenario will present unique issues, and Kean Miller is prepared to help answer any questions and guide parties through any issues that they may face.
 See Black’s Law Dictionary 761 (10th ed. 2014); Sun Oper., L.P. v. Holt, 984 S.W.2d 277, 282–83 (Tex. App.—Amarillo 1998, pet. denied); Valero Transmission Co. v. Mitchell Energy Corp., 743 S.W.2d 658, 663 (Tex. App.—Houston [1st Dist.] 1987, no writ).
 25 Tex. Admin. Code § 97.1 (13).
 25 Tex. Admin. Code § 97.1 (22).
 World Health Organization, WHO Director-General’s opening remarks at the media briefing on COVD-19 – 11 March 2020 (March 11, 2020).
 Centers for Disease Control and Prevention, Coronavirus Disease 2019 (COVID-19): Situation Summary (updated April 7, 2020) https://www.cdc.gov/coronavirus/2019-ncov/cases-updates/summary.html (last visited April 7, 2020).
 Virginia Power Energy Mktg., Inc. v. Apache Corp., 297 S.W.3d 397, 402 (Tex. App.—Houston [14th Dist.] 2009, pet. denied).
 Sun Oper., 984 S.W.2d at 283. See also TEC Olmos, LLC v. ConocoPhillips Co., 555 S.W.3d 176, 181 (Tex. App.—Houston [1st Dist.] 2018, rev. denied); Zurich Am. Ins. Co. v. Hunt Petrol. (AEC), Inc., 157 S.W.3d 462, 466 (Tex. App.—Houston [14th Dist.] 2004, no pet.).
 Sun Oper., 984 S.W.2d at 283.
 URI, Inc. v. Kleberg Cty., 543 S.W.3d 755, 764 (Tex. 2018).
 See PPG Indus., Inc. v. Shell Oil Co., 919 F.2d 17, 19 (5th Cir. 1990).
 The doctrine of impossibility will not apply where the risk was allocated by agreement. See In re Doe, 917 S.W.2d 139, 142 (Tex. App.—Amarillo 1996, writ denied).
 Centex Corp. v. Dalton, 840 S.W.2d 952, 954–55 (Tex. 1992).
 Solar Soccer Club v. Prince of Peace Church of Carrollton, 234 S.W.3d 814, 824 (Tex. App.—Dallas 2007, pet. denied); Janak v. FDIC, 586 S.W.2d 902, 906–07 (Tex. App.—Houston [1st Dist.] 1979, no writ).
 Centex Corp., 840 S.W.2d at 954.
 Huffines v. Swor Sand & Gravel, 750 S.W.2d 38, 40 (Tex. App.—Forth Worth 1988, no pet.).
 Stafford v. Southern Vanity Magazine, Inc., 231 S.W.3d 530, 537 (Tex. App.—Dallas 2007, pet. denied) (defendant had transferred stock to a third party, so could not use defense of impossibility to prevent judgment directing it to transfer stock to plaintiff as agreed).
 In re Doe, 917 S.W.2d at 142.