Force Majeure: Does It Cancel Your Contractual Obligations?

A force majeure clause can excuse a party from certain contractual obligations when an extraordinary event like a natural disaster makes performance impossible, impracticable, or otherwise triggers the protections written into the agreement. But that does not mean someone can simply point to a hurricane, government order, pandemic, strike, or other unforeseeable event and walk away from a contract. The wording of the clause, what actually happened, and how the event affected performance all matter.

Before accepting a force majeure claim at face value, take a closer look at the contract. A contract might excuse certain obligations while leaving others intact. It might require prompt notice, reasonable efforts to overcome the disruption, or proof that the event actually caused the failure to perform. Before assuming a force majeure clause gets you off the hook, you need to know exactly what protection the contract provides.

If you are dealing with a force majeure dispute, find a contract lawyer through the Super Lawyers directory to help you understand your rights and options.

What Is a Force Majeure Clause?

A force majeure is a standard contract provision. It is a clause that allocates the risk of extraordinary events that interfere with, delay, or prevent performance. When included, it creates a defense for either party. Without a force majeure clause, a party that does not perform may face a breach of contract claim, although defenses, such as impossibility, impracticability, or frustration of purpose, may still apply.

However, claiming force majeure doesn’t provide automatic blanket protection simply because a certain type of event occurred. The contract establishes the circumstances under which the parties receive relief.

Force majeure clauses can vary significantly in their wording and impact. Some identify specific events. Others use broader language. The wording is crucial because it will directly impact the party’s legal liability for non-performance:

• Natural disasters (acts of god)
• Fires and floods
• Extreme weather
• Acts of war
• Riots or civil unrest
• Labor strikes
• Government orders or regulatory action
• Epidemics or pandemics
• Embargoes
• Other events specifically identified in the contract

When Are Force Majeure Clauses Used?

A force majeure clause can be used in a wide variety of contractual agreements. They are especially used in contracts where a significant unexpected disruption would directly impact one or both parties’ ability to perform their contractual duties. In commercial contracts, a force majeure clause can address disruptions that prevent the provision of goods or services.

Construction contracts have force majeure clauses to address delays caused by weather, government action, labor disruptions, or supply chain disruptions. In commercial construction, missing contractual delivery dates can result in significant fines. The force majeure clause protects the builder from issues beyond their control.

Commercial leases may have a force majeure clause for delays in construction, delivery of premises, or other obligations. Force majeure provisions can address disruptions affecting the availability, manufacture, transportation, or delivery of goods.

What Does a Force Majeure Clause Actually Do?

A force majeure clause can provide relief from specific contractual obligations when an extraordinary circumstance prevents or interferes with performance.

What that relief looks like depends on the language of the agreement. The clause may temporarily delay performance, excuse a particular obligation, or, in some contracts, give a party the right to terminate after the disruption continues for a certain amount of time. The rest of the contract may remain in effect.

Usually Does Not Automatically Excuse Payment Obligations

Do not assume that a force majeure event excuses every obligation under a contract, particularly payment obligations.

Many force majeure clauses treat the duty to pay differently from duties involving delivery, construction, services, or other performance. A party might be excused from delivering goods because an event made delivery impossible while still owing money that was already due.

What Are the Limits of Force Majeure?

Contract law generally tries to protect everyone’s rights within the agreement. To do that, invoking force majeure isn’t all-encompassing or the end of legal conversation. The scrutiny that takes place afterward must support the claim.

The event must be covered by the clause. There needs to be a direct connection between the event and the party’s ability to perform. Simply being more expensive or harder to perform may not be enough. The party may also have a duty to mitigate losses or partially perform where possible.

Can You Challenge Someone’s Force Majeure Claim?

If one party makes a force majeure claim, the other parties subject to the contract can challenge that claim.

There are several legal grounds available. The event being claimed may not be covered by the contract. Even if the specific event is listed, the circumstances surrounding the event may not be covered. The event happening may not have prevented the party’s performance. Even if the event was impactful, the other party may have been able to do partial performance and failed to do so.

The party invoking force majeure may have failed to follow the contract’s requirements for doing so. They could have failed to fulfill notice requirements or take any mitigation efforts. There could be documentation requirements that were not met.

What If the Contract Does Not Have a Force Majeure Clause?

Force majeure clauses have become more common after the COVID-19 pandemic. People never expected a global pandemic that would bring the world to a halt. Many people found themselves legally liable for contracts that they were unable to fulfill.

A force majeure clause is a contractual defense. Other legally recognized defenses include impossibility, impracticability, and frustration of purpose. These defenses are not interchangeable with force majeure; they provide alternatives when a contract lacks a force majeure clause.

What Should You Review Before Invoking or Challenging Force Majeure?

There are several steps contractual parties should take before they invoke or challenge a force majeure claim.

The first is to review the contract terms. Focus on the specific language of the force majeure clause. Take note of any requirements or obligations that are imposed on the parties. Evaluate the causal connection between the claimed event and the ability to perform contractual duties. These could include notice or mitigation requirements.

Check for any exclusion listed that may apply to the situation. Finally, review the governing law for the jurisdiction that would govern the agreement.

Seek Legal Advice

A force majeure clause can provide important protection when an unexpected event interferes with your ability to perform a contract, but it does not automatically wipe away your obligations. If you are relying on force majeure or challenging someone else’s claim, an attorney can review the contract and circumstances to determine whether the clause actually gives you the protection you need.

For help with a contract dispute or questions about force majeure, use the Super Lawyers directory to find a contracts lawyer who can evaluate your situation.