Force majeure
Encyclopedia
Force majeure or vis major
(Latin) "superior force", also known as cas fortuit (French) or casus fortuitus (Latin) "chance occurrence, unavoidable accident", is a common clause in contract
s that essentially frees both parties from liability
or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war
, strike
, riot
, crime, or an event described by the legal term act of God
(such as hurricane, flooding, earthquake
, volcanic eruption, etc.), prevents one or both parties from fulfilling their obligations under the contract.
However, force majeure is not intended to excuse negligence
or other malfeasance
of a party, as where non-performance is caused by the usual and natural consequences of external forces (for example, predicted rain stops an outdoor event), or where the intervening circumstances are specifically contemplated.
A force majeure may also be the overpowering force itself, which prevents the fulfillment of a contract. In that instance, it is actually the impossibility
or impracticability
defenses.
In the military, force majeure has a slightly different meaning. It refers to an event, either external or internal, that happens to a vessel or aircraft that allows it to enter normally restricted areas without penalty. An example would be the Hainan Island incident
where a U.S. Navy aircraft landed at a Chinese military airbase after a collision with a Chinese fighter in April 2001. Under the principle of force majeure, the aircraft must be allowed to land without interference.
-supply agreement, the mining
company may seek to have "geological
risk" included as a force majeure event; however, the mining company should be doing extensive exploration and analysis of its geological reserves and should not even be negotiating a coal-supply agreement if it cannot take the risk that there may be a geological limit to its coal supply from time to time. The outcome of that negotiation, of course, depends on the relative bargaining power of the parties and there will be cases where force majeure clauses can be used by a party effectively to escape liability for bad performance.
In Hackney Borough Council v. Dore (1922) 1 KB 431 it was held that "The expression means some physical or material restraint and does not include a reasonable fear or apprehension of such a restraint".
The expression bears more extensive meaning than "act of God
" or vis major
. As to delay due to breakdown of machinery, it comes within the words "force majeure", which certainly cover accidents to machinery. The term cannot, however, be extended to cover bad weather, football matches, or a funeral. Matsoukis v. Priestman & Co (1915) 1 KB 681.
The expression is undoubtedly a term of wider import than vis major. Judges have agreed that strikes, breakdown of machinery, which though normally not included in vis major, are included in force majeure.
In re Dharnrajmal Gobindram v. Shamji Kalidas [All India Reporter 1961 Supreme Court (of India) 1285] it was held that "An analysis of ruling on the subject shows that reference to the expression is made where the intention is to save the defaulting party from the consequences of anything over which he had no control".
Under international law it refers to an irresistible force or unforeseen event beyond the control of a State making it materially impossible to fulfil an international obligation. Force majeure precludes an international act from being wrongful where it otherwise would have been.
Externality : The defendant must have nothing to do with the event's happening.
Unpredictability : If the event could be foreseen, the defendant is obligated to have prepared for it. Being unprepared for a foreseeable event leaves the defendant culpable. This standard is very strictly applied:
Irresistibility : The consequences of the event must have been unpreventable.
Other events that are candidates for force majeure in French law are hurricanes and earthquakes. Force majeure is a cause of relief from responsibility that is applicable throughout French law.
On the other hand, the German understanding goes under the German translation of vis major but seems conceptually synonymous with the common law interpretation of force majeure, comprehending both natural disasters and events such as strikes, civil unrest, and war. However, even in the event of force majeure, liability persists in the face of default by a debtor (Schuldnerverzug, cf. BGB §287 (in German)) or deprivation of property (Sachentziehung, cf. BGB §848 (in German)).
Force Majeure in areas prone to natural disaster requires a definition of the magnitude of the event for which Force Majeure could be considered as such in a contract. As an example in a highly seismic area a technical definition of the amplitude of motion at the site could be established on the contract base for example on probability of occurrence studies. This parameter or parameters can later be monitored at the construction site (with a commonly agreed procedure). An earthquake could be a small shaking or damaging event. The occurrence of an earthquake does not imply the occurrence of damage or disruption. For small and moderate events it is reasonable to establish requirements for the contract processes; for large events it is not always feasible or economical to do so. Concepts such as 'damaging earthquake' in force majeure clauses does not help to clarify disruption, especially in areas where there are no other reference structures or most structures are not seismically safe.
Force majeure and cas fortuit are distinct notions in French Law.
Vis major
Vis major is a greater or superior force; an irresistible force. It may be a loss that results immediately from a natural cause that could not have been prevented by the exercise of prudence, diligence and care. It is also termed as vis divina or superior force.It is an irresistible violence;...
(Latin) "superior force", also known as cas fortuit (French) or casus fortuitus (Latin) "chance occurrence, unavoidable accident", is a common clause in contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
s that essentially frees both parties from liability
Legal liability
Legal liability is the legal bound obligation to pay debts.* In law a person is said to be legally liable when they are financially and legally responsible for something. Legal liability concerns both civil law and criminal law. See Strict liability. Under English law, with the passing of the Theft...
or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war
War
War is a state of organized, armed, and often prolonged conflict carried on between states, nations, or other parties typified by extreme aggression, social disruption, and usually high mortality. War should be understood as an actual, intentional and widespread armed conflict between political...
, strike
Strike action
Strike action, also called labour strike, on strike, greve , or simply strike, is a work stoppage caused by the mass refusal of employees to work. A strike usually takes place in response to employee grievances. Strikes became important during the industrial revolution, when mass labour became...
, riot
Riot
A riot is a form of civil disorder characterized often by what is thought of as disorganized groups lashing out in a sudden and intense rash of violence against authority, property or people. While individuals may attempt to lead or control a riot, riots are thought to be typically chaotic and...
, crime, or an event described by the legal term act of God
Act of God
Act of God is a legal term for events outside of human control, such as sudden floods or other natural disasters, for which no one can be held responsible.- Contract law :...
(such as hurricane, flooding, earthquake
Earthquake
An earthquake is the result of a sudden release of energy in the Earth's crust that creates seismic waves. The seismicity, seismism or seismic activity of an area refers to the frequency, type and size of earthquakes experienced over a period of time...
, volcanic eruption, etc.), prevents one or both parties from fulfilling their obligations under the contract.
However, force majeure is not intended to excuse negligence
Negligence
Negligence is a failure to exercise the care that a reasonably prudent person would exercise in like circumstances. The area of tort law known as negligence involves harm caused by carelessness, not intentional harm.According to Jay M...
or other malfeasance
Malfeasance
The expressions misfeasance and nonfeasance, and occasionally malfeasance, are used in English law with reference to the discharge of public obligations existing by common law, custom or statute.-Definition and relevant rules of law:...
of a party, as where non-performance is caused by the usual and natural consequences of external forces (for example, predicted rain stops an outdoor event), or where the intervening circumstances are specifically contemplated.
Purpose
Time-critical and other sensitive contracts may be drafted to limit the shield of this clause where a party does not take reasonable steps (or specific precautions) to prevent or limit the effects of the outside interference, either when they become likely or when they actually occur. A force majeure may work to excuse all or part of the obligations of one or both parties. For example, a strike might prevent timely delivery of goods, but not timely payment for the portion delivered. Similarly, a widespread power outage would not be a force majeure excuse if the contract requires the provision of backup power or other contingency plans for continuity.A force majeure may also be the overpowering force itself, which prevents the fulfillment of a contract. In that instance, it is actually the impossibility
Impossibility
In contract law, impossibility is an excuse for the nonperformance of duties under a contract, based on a change in circumstances , the nonoccurrence of which was an underlying assumption of the contract, that makes performance of the contract literally impossible...
or impracticability
Impracticability
The doctrine of impracticability in the common law of contracts excuses performance of a duty, where that duty has become unfeasibly difficult or expensive for the party who was to perform....
defenses.
In the military, force majeure has a slightly different meaning. It refers to an event, either external or internal, that happens to a vessel or aircraft that allows it to enter normally restricted areas without penalty. An example would be the Hainan Island incident
Hainan Island incident
On April 1, 2001, a mid-air collision between a United States Navy EP-3E ARIES II signals intelligence aircraft and a People's Liberation Army Navy J-8II interceptor fighter jet resulted in an international dispute between the United States and the People's Republic of China called the Hainan...
where a U.S. Navy aircraft landed at a Chinese military airbase after a collision with a Chinese fighter in April 2001. Under the principle of force majeure, the aircraft must be allowed to land without interference.
Importance
The importance of the force majeure clause in a contract, particularly one of any length in time, cannot be overstated as it relieves a party from an obligation under the contract (or suspends that obligation). What is permitted to be a force majeure event or circumstance can be the source of much controversy in the negotiation of a contract and a party should generally resist any attempt by the other party to include something that should, fundamentally, be at the risk of that other party. For example, in a coalCoal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
-supply agreement, the mining
Mining
Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...
company may seek to have "geological
Geology
Geology is the science comprising the study of solid Earth, the rocks of which it is composed, and the processes by which it evolves. Geology gives insight into the history of the Earth, as it provides the primary evidence for plate tectonics, the evolutionary history of life, and past climates...
risk" included as a force majeure event; however, the mining company should be doing extensive exploration and analysis of its geological reserves and should not even be negotiating a coal-supply agreement if it cannot take the risk that there may be a geological limit to its coal supply from time to time. The outcome of that negotiation, of course, depends on the relative bargaining power of the parties and there will be cases where force majeure clauses can be used by a party effectively to escape liability for bad performance.
In Hackney Borough Council v. Dore (1922) 1 KB 431 it was held that "The expression means some physical or material restraint and does not include a reasonable fear or apprehension of such a restraint".
The expression bears more extensive meaning than "act of God
Act of God
Act of God is a legal term for events outside of human control, such as sudden floods or other natural disasters, for which no one can be held responsible.- Contract law :...
" or vis major
Vis major
Vis major is a greater or superior force; an irresistible force. It may be a loss that results immediately from a natural cause that could not have been prevented by the exercise of prudence, diligence and care. It is also termed as vis divina or superior force.It is an irresistible violence;...
. As to delay due to breakdown of machinery, it comes within the words "force majeure", which certainly cover accidents to machinery. The term cannot, however, be extended to cover bad weather, football matches, or a funeral. Matsoukis v. Priestman & Co (1915) 1 KB 681.
The expression is undoubtedly a term of wider import than vis major. Judges have agreed that strikes, breakdown of machinery, which though normally not included in vis major, are included in force majeure.
In re Dharnrajmal Gobindram v. Shamji Kalidas [All India Reporter 1961 Supreme Court (of India) 1285] it was held that "An analysis of ruling on the subject shows that reference to the expression is made where the intention is to save the defaulting party from the consequences of anything over which he had no control".
Under international law it refers to an irresistible force or unforeseen event beyond the control of a State making it materially impossible to fulfil an international obligation. Force majeure precludes an international act from being wrongful where it otherwise would have been.
Elements
The understanding of force majeure in French law is similar to that of international law and vis major as defined above. For a defendant to invoke force majeure in French law, the event proposed as force majeure must pass three tests:Externality : The defendant must have nothing to do with the event's happening.
Unpredictability : If the event could be foreseen, the defendant is obligated to have prepared for it. Being unprepared for a foreseeable event leaves the defendant culpable. This standard is very strictly applied:
- CE 9 April 1962, "Chais d’Armagnac": The Conseil d'Etat adjudged that, since a flood had occurred 69 years before the one that caused the damage at issue, the latter flood was predictable.
- Administrative tribunal of Grenoble, 19 June 1974, "Dame Bosvy": An avalanche was judged to be predictable since another had occurred around 50 years before.
Irresistibility : The consequences of the event must have been unpreventable.
Other events that are candidates for force majeure in French law are hurricanes and earthquakes. Force majeure is a cause of relief from responsibility that is applicable throughout French law.
On the other hand, the German understanding goes under the German translation of vis major but seems conceptually synonymous with the common law interpretation of force majeure, comprehending both natural disasters and events such as strikes, civil unrest, and war. However, even in the event of force majeure, liability persists in the face of default by a debtor (Schuldnerverzug, cf. BGB §287 (in German)) or deprivation of property (Sachentziehung, cf. BGB §848 (in German)).
Force Majeure in areas prone to natural disaster requires a definition of the magnitude of the event for which Force Majeure could be considered as such in a contract. As an example in a highly seismic area a technical definition of the amplitude of motion at the site could be established on the contract base for example on probability of occurrence studies. This parameter or parameters can later be monitored at the construction site (with a commonly agreed procedure). An earthquake could be a small shaking or damaging event. The occurrence of an earthquake does not imply the occurrence of damage or disruption. For small and moderate events it is reasonable to establish requirements for the contract processes; for large events it is not always feasible or economical to do so. Concepts such as 'damaging earthquake' in force majeure clauses does not help to clarify disruption, especially in areas where there are no other reference structures or most structures are not seismically safe.
Force majeure and cas fortuit are distinct notions in French Law.
Sample clause
The following is an example of how force majeure might be described in a specific contract.- Clause 19. Force Majeure
- A party is not liable for failure to perform the party's obligations if such failure is as a result of Acts of God (including fire, flood, earthquake, storm, hurricane or other natural disaster), war, invasion, act of foreign enemies, hostilities (regardless of whether war is declared), civil war, rebellion, revolution, insurrection, military or usurped power or confiscation, terrorist activities, nationalisation, government sanction, blockage, embargo, labor dispute, strike, lockout or interruption or failure of electricity or telephone service. No party is entitled to terminate this Agreement under Clause 17 (Termination) in such circumstances.
- If a party asserts Force Majeure as an excuse for failure to perform the party's obligation, then the nonperforming party must prove that the party took reasonable steps to minimize delay or damages caused by foreseeable events, that the party substantially fulfilled all non-excused obligations, and that the other party was timely notified of the likelihood or actual occurrence of an event described in Clause 19 (Force Majeure).
See also
- Contract law
- Hardship clauseHardship clauseHardship clause is a clause in a contract that is intended to cover cases in which unforeseen events occur that fundamentally alter the equilibrium of a contract resulting in an excessive burden being placed on one of the parties involved....
- Hell or high water clauseHell or high water clauseA hell or high water clause is a clause in a contract, usually a lease, which provides that the payments must continue irrespective of any difficulties which the paying party may encounter . The clause usually forms part of a parent company guarantee...
- ImpossibilityImpossibilityIn contract law, impossibility is an excuse for the nonperformance of duties under a contract, based on a change in circumstances , the nonoccurrence of which was an underlying assumption of the contract, that makes performance of the contract literally impossible...
- Mutual assent
- Substantial performanceSubstantial performanceAt common law, substantial performance is an alternative principle to the perfect tender rule. This principle is relevant when a contractor's performance is in some way deficient, through no willful act by the contractor, yet is so nearly equivalent that it would be unreasonable for the owner to...
- Vis majorVis majorVis major is a greater or superior force; an irresistible force. It may be a loss that results immediately from a natural cause that could not have been prevented by the exercise of prudence, diligence and care. It is also termed as vis divina or superior force.It is an irresistible violence;...