Purchaser wants contract for manufacture and sale of large quantities of CBD oil terminated on account of COVID-19-related state emergency orders, but that’s not what the force majeure clause says.

In a contract the dispute over whether a contract exists and whether payment for the processing and production of winterized CBD oil is due, the two parties, a buyer and a seller exchanged correspondence with the seller threatening to take the buyer to court if the seller wasn’t paid. Seeing the writing on the wall, the Kentucky buyer went to court before the Oregon seller and filed a lawsuit seeking to declare the $9MM contract invalid arguing it rested on a condition precedent which required the buyer to raise $2MM in capital and that the hemp oil needed to meet certain quantities and specifications, neither of which occurred. 

In addition to looking to invalidate the agreement on account of the lack of a condition precedent (the capital raise not happening) the buyer also plead that this provision in the agreement:

4.3 Force Majeure. In the event of riot, war, rebellion, fire flood, act of God, terrorism, act of governmental authorities or any other cause beyond the control of the Parties hereto which renders it impossible for either Party to comply with the terms of this Agreement (a “Force Majeure Occurrence”), there shall be no liability for non-compliance caused thereby during the continuance thereof and any additional period of time reasonably necessary to remediate the effect of such Force Majeure Occurence.

when combined with the spread of the coronavirus and the emergence declared by the Governor’s executive order rendered the contract unenforceable and requested that the agreement be rescinded or terminated on account of the emergency declaration. Apparently in spite of the provisions language stating that additional time is the remedy under the Force Majeure provision, not termination or rescission. 

You can read the full complaint here along with copies of the letters and the contract for providing and purchasing the winterized CBD oil.

Ashley Brandt

Hi there! I’m happy you’re here. My name is Ashley Brandt and I’m an attorney in Chicago representing clients in the Food and Beverage, Advertising, Media, and Real Estate industries. A while back I kept getting calls and questions from industry professionals and attorneys looking for advice and information on a fun and unique area of law that I’m lucky enough to practice in. These calls represented a serious lack of, and need for, some answers, news, and information on the legal aspects of marketing and media. I've got this deep seeded belief that information should be readily available and that the greatest benefit from the information age is open access to knowledge... so ... this blog seemed like the best way to accomplish that. I enjoy being an attorney and it’s given me some amazing opportunities, wonderful experiences, and an appreciation and love for this work. I live in Chicago and work at an exceptional law firm, Goldstein & McClintock, with some truly brilliant people. Feel free to contact me at any time with any issues, comments, concerns… frankly, after reading this far, I hope you take the time to at least let me know what you think about the blog and how I can make it a better resource.

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