Chinese firms use incomprehensible legal tactics to curb losses from viruses.

Chinese firms use incomprehensible legal tactics to curb losses from viruses.
The virus has led to firms seeking to withdraw from contracts.

"In the months and years to come, this will be an all-powerful legal mess." Such a harsh prediction of the potential legal and business implications of the virus outbreak in China was made by an experienced veteran of the country's business scene. Dan Harris of American law firm Harris Bricken fears that today's channels of mainland suppliers claiming force majeure (fm), the incomprehensible legal maneuver used to get out of contracts, could turn into a tidal wave.

There is no doubt that the crisis has put many firms at risk. In a normal year for China, most factories would be closed for a week or so in early February so those migrant workers could return to their villages and celebrate Chinese New Year. By now, the factories would be operating at full capacity. As much of the area around Wuhan, the center of the outbreak, has been blocked and movement is limited, workers would slowly return. Morgan Stanley International Investment Bank believes production could reach only 60%-80% of normal levels by the end of February.

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