Force Majeure: Definition, Example and Related Terms
Force Majeure ?
"Force Majeure," a French term meaning "superior force" refers to a legal doctrine that allows parties to a contract to be relieved from liability or obligation when an extraordinary event or circumstance beyond their control prevents them from fulfilling their contractual duties. Such events, often referred to as "acts of God," may include natural disasters like hurricanes, floods, earthquakes, and pandemics, as well as human-made events such as wars, terrorist attacks, civil unrest, labor strikes, and governmental actions or prohibitions.
The unprecedented global outbreak of COVID-19 in early 2020 has since become a seminal case for Force Majeure, as it significantly disrupted supply chains, labor availability, and business operations worldwide, leading to numerous instances where parties invoked Force Majeure clauses in their contracts. The pandemic's impact was so extensive that it prompted a re-evaluation of Force Majeure provisions to account for public health crises alongside traditional natural and human-made disasters.
Post-COVID-19, the application of Force Majeure has continued to evolve with the occurrence of extreme weather events attributed to climate change, growing geopolitical tensions, and other global disruptions such as the Suez Canal blockage in 2021 caused by the grounding of the Ever Given container ship. These events have further highlighted the importance of having a well-drafted Force Majeure clause that clearly defines what constitutes a Force Majeure event, the process for notifying parties of its occurrence, and the consequences for the contract once it is declared. The clause often includes provisions for the suspension of obligations, extensions of time to perform, renegotiation or adaptation of contract terms, and, in some cases, termination of the contract.
As the world continues to face new and unforeseen challenges, the reliance on Force Majeure clauses to provide a framework for managing the risks associated with such events remains vital. Parties to a contract are encouraged to seek legal counsel when drafting and invoking Force Majeure to ensure that the clause is enforceable and provides adequate protection and recourse in line with the evolving legal landscape.
Example(s)
Force Majeure Neither Party shall be liable for any failure to perform its obligations under this Agreement if prevented from doing so by a Force Majeure Event. For the purposes of this Agreement, a "Force Majeure Event" shall include acts of God, such as severe acts of nature or weather events including floods, fires, earthquakes, or explosions; war, acts of terrorism, and epidemics; civil disturbances or riots; governmental action or inaction including laws, orders, regulations, directions, or actions constituting an embargo, expropriation or confiscation of facilities or compliance with any governmental order; power grid failures; and labor strikes. Upon occurrence of any Force Majeure Event, the affected Party shall notify the other Party within five (5) business days, providing details of the Force Majeure Event and its anticipated effect on the Party's performance under this Agreement. The affected Party is required to use reasonable efforts to mitigate the effects of the Force Majeure Event and to resume performance under this Agreement as soon as possible. If the Force Majeure Event continues for a period longer than thirty (30) days, either Party may terminate the Agreement upon written notice to the other Party without any further liability.