What Is Force Majeure?
Force majeure is a clause included in contracts to remove liability for unforeseeable and unavoidable catastrophes interrupting the expected timeline and preventing participants from fulfilling obligations. These clauses generally cover natural disasters like hurricanes, tornadoes, and earthquakes, and human actions, such as armed conflict and human-made diseases.
Key Takeaways
- Force majeure is a clause included in contracts to remove liability for unforeseeable and unavoidable catastrophes that prevent participants from fulfilling obligations.
- These clauses generally cover natural disasters and catastrophes created by humans.
- In some jurisdictions, the event must be unforeseeable, external, and irresistible.
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Elements of the Clause
- An event must be unforeseeable
- The circ*mstances must be external to the contract parties
- The event must be serious enough to render it impossible for the party to perform contractual obligations
Invoking Force Majeure
For events to constitute the use of force majeure, they must be unforeseeable, external to contract parties, and unavoidable. Force majeure means “greater force” and is related to an act of God, an event for which no party can be held accountable. These concepts are defined and applied differently depending on the jurisdiction.
Suppose an avalanche destroys a supplier’s factory in the French Alps, causing long shipment delays and leading the client to sue for damages. The supplier might employ a force majeure defense, arguing that the avalanche was an unforeseeable, external, and unavoidable event—the three tests applied by French law. Unless the contract specifically named an avalanche as removing the supplier’s liability, the court may decide that the supplier owes damages.
The concept of force majeure originated in French civil law and is an accepted standard in many jurisdictions that derive their legal systems from the Napoleonic Code. In common law systems, such as those of the United States and the United Kingdom, force majeure clauses are acceptable but must be more explicit about the events that would trigger the clause.
Force Majeure vs. Pacta Sunt Servanda
Force majeure conflicts with the concept of “pacta sunt servanda” (Latin for “agreements must be kept”), a key concept in civil and international law with analogs in common law. It is not supposed to be easy to escape contractual liability, and proving that events were unforeseeable, for example, is difficult. Human threats like cyber, nuclear, and biological warfare capabilities or natural disasters have raised questions about what is and is not foreseeable in a legal sense.
If a natural or other disaster repeats or reoccurs, it may not be considered unforeseeable.
Is Force Majeure Always Recognized and Upheld?
The International Chamber of Commerce has attempted to clarify the meaning of force majeure by applying a standard of “impracticability,” meaning that it would be unreasonably burdensome and expensive, if not impossible, to carry out the terms of the contract.It can be difficult to prove that an event is unforeseeable and serious enough to void a contract. In any jurisdiction, contracts containing specific definitions that constitute force majeure—ideally ones that respond to local threats—hold up better under scrutiny.
What Are Examples of Force Majeure?
Events that could trigger a force majeure clause include war, terrorist attacks, a pandemic, or natural disasters that fall under the “act of God” category, such as a flood, earthquake, or hurricane.
Does a Pandemic Like COVID-19 Qualify for Force Majeure?
The 2020 pandemic opened new litigations regarding force majeure clauses. In Virginia, Regal Cinemas theaters ceased operations because of the pandemic.The United States District Court for the Western District of Virginia ruled that the force majeure clause in the lease executed between the parties only applied if“the Complex or other improvements on the Property, or any part thereof, aredamaged or destroyedby fire, flood, natural causes, or other casualties[.]”The COVID-19 pandemic did not excuse Regal Cinemas from its performance under its contract. A ruling in favor of the University of Vermont also found that because its “closure” was due to the COVID-19 pandemic, and not another catastrophe, the university did not have to issue refunds for housing or meal plans.
The Bottom Line
Force majeure clauses enable parties to better manage risk and protect themselves if something unthinkable happens. To implement the clause and abandon provisions of a contract or actions under the contract, an event must be unforeseeable, external to the contract parties, and serious enough to render it impossible for the party to perform contractual obligations.
