What is Force Majeure?
Force majeure is a crucial clause embedded in contracts to exempt participants from liability for unforeseeable and unavoidable catastrophes that disrupt the anticipated progress, making it impossible to fulfill contractual obligations.
This provision typically encompasses natural calamities like hurricanes, tornadoes, and earthquakes, alongside human-induced activities such as armed conflicts and man-made diseases.
Mastering the Fundamentals
- Force Majeure Clause: A contractual provision to absolve liability for unforeseeable, unstoppable catastrophic events hindering participants from meeting their contractual duties.
- Coverage: Encompasses both natural disasters and human-induced catastrophes.
- Applicability Tests: In certain jurisdictions, an event’s qualification as force majeure involves testing for unforeseeability, externality, and irresistibility.
- Evolving Legal Definitions: Rising awareness of pandemics, asteroids, supervolcanoes, cyber threats, and nuclear warfare sparks legal discussions on foreseeability.
- Conceptual Conflict: Clashes with “pacta sunt servanda,” the principle that agreements must be honored.
Decoding Force Majeure
Taken from the French term meaning “greater force,” force majeure relates to overwhelming events like natural disasters or human activities, such as armed conflicts or large-scale diseases, that freed parties from fulfilling contractual terms. For these events to justify force majeure, they must be:
- Unpredictable,
- External to the contract,
- Unavoidable.
Depending on your jurisdiction, these elements may carry varying definitions and interpretations. Widely acknowledged in jurisdictions influenced by the Napoleonic Code, force majeure is permissible in common law systems like the United States and the United Kingdom but demands more precise definition.
The Dichotomy: Force Majeure vs. Pacta Sunt Servanda
Consequentially, force majeure can antagonize the principle of “pacta sunt servanda” (Latin for “agreements must be kept”), a bedrock of civil and international law. Proving unforeseeability is intricately challenging due to continuously evolving understandings of natural and man-made threats, blurred lines between human agency and external events, and ongoing litigation exploring culpability in natural disasters.
Illustrated by Example: Navigating Real-World Scenarios
Scenario: An avalanche decimates a supplier’s factory in the French Alps, resulting in prolonged shipment delays and prompting a lawsuit.
- Force Majeure Defense: The supplier could argue that the avalanche was unpredictable, external, and unavoidable—aligned with French law’s three tests of applicability. However, foreseeability involves assessing past similar events, making the verdict dependent on contract specifics.
Special Ethical Considerations
The International Chamber of Commerce advocates for an “impracticability” standard, emphasizing excessive difficulty and cost instead of sheer impossibility. To effectuate force majeure in international trade, defined standardized provisions adaptive to local threats bear greater scrutiny resilience.
Trigger Points and Contractual Relief
- Triggers: Events like wars, terrorist strikes, pandemics, and natural disasters (like floods, earthquakes, hurricanes) typically invoke force majeure clauses.
COVID-19 and Force Majeure
In presently prevailing circumstances, COVID-19 may warrant force majeure consideration if adherence to contractual… obligations becomes impossible. However, given preventative measures and time elapsed since the outbreak’s onset, foreseeability into future contracts must be reassessed.
Closing Thoughts
The force majeure principle primarily aims to mitigate unforeseen extreme risks within contractual frameworks. However, its effectiveness varies depending on the clarity of contractual details and the financial capabilities required to substantiate claims. Excessively benefiting larger entities, unequivocal formulations in force majeure clauses may warrant fresh perspectives amidst evolving global threats.
Related Terms: liability, obligations, act of God, common law, natural disasters.
References
- Cornell Law School, Legal Information Institute. “Force Majeure”.
- American Journal of International Law, via JSTOR. “The Principle Pacta Sunt Servanda and the Nature of Obligation Under International Law”.
- Latham & Watkins. “Impact of COVID-19 on French Law Governed Contracts: Update”, Page 1.
- International Chamber of Commerce. “ICC Force Majeure and Hardship Clauses: March 2020”, Page 1.
