Force Majeure Clause – Definition

Cite this article as:"Force Majeure Clause – Definition," in The Business Professor, updated November 30, 2018, last accessed August 8, 2020, https://thebusinessprofessor.com/lesson/force-majeure-clause-explained/.

Back To: COMMERCIAL LAW: CONTRACTS, PAYMENTS, SECURITY INTERESTS, & BANKRUPTCY

Force Majeure Definition

A clause in a contract that eliminates the duties or obligations of the parties. The clause is enforced when unavoidable, natural calamities affect the ability of the parties to meet their obligations under the agreement.

A Little More on What is a Force Majeure Clause

Force majeure has been taken from French language, meaning “greater force.” It is connected with the idea that natural occurrences are an act of God. More specifically, it involves situations for which no one can be considered accountable, like hurricanes or a tornados. Force majeure entails human actions also, however, like armed conflict. The force majeure events have two primary characteristics:

  • Unforeseeable, and
  • unavoidable.

The International Chamber of Commerce defines force majeure using the word “impracticability,” meaning that it is– if not essentially impossible – irrationally burdensome and costly to execute the contract terms. Impracticability is less than impossibility, but still unduly difficult. he event bringing this situation should be external to both parties, unexpected, and unavoidable. It is very hard to prove such conditions.

In any jurisdiction, contracts employ specific definitions making force majeure applicable to local threats. For instance, if the avalanche ruins a supplier’s plant in the French Alps, it causes shipment delays and results in the client suing for the damages. The supplier can use a force majeure defense, mentioning that avalanche was an unexpected, unavoidable, and external event.

In general, force majeure is in tension with the concept of “pacta sunt servanda” (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 by design.

With time, the world is getting more familiar with natural threats like asteroids, solar flares, super-volcanoes, as well as modern ones like cyber, biological warfare, and nuclear capabilities. This leads to a debate for what is and is not “predictable” in a legal sense. For example, there are questions as to whether construction and drilling projects (such as fracking) that lead to natural disasters are subject to force major. In short, the understanding force majeure is every changing.

References for Force Majeure

Academic Research on Force Majeure

Hardship and force majeure, Maskow, D. (1992). The American Journal of Comparative Law40(3), 657-669.

Modern analysis of the legal effect of force majeure clauses in situations of commercial impracticability, Declercq, P. J. (1995). JL & Com.15, 213.

Force Majeure, Squillante, A. M., & Congalton, F. M. (1975). Com. LJ80, 4.

Force Majeure and the Denial of an Export License Under Soviet Law: A Comment on Jordan Investments Ltd. v. Soiuznefteksport, Berman, H. J. (1959). Zeitschrift für ausländisches und internationales Privatrecht24(H. 3), 449-469.

Force majeure and hardship in international sales contracts, Schwenzer, I. (2008). Victoria U. Wellington L. Rev.39, 709.

Excuse for Non-Performance and Force Majeure in Economic Development Agreements, Delaume, G. R. (1971). Colum. J. Transnat’l L.10, 242.

Nissho-Iwai Company, Ltd. v. Occidental Crude Sales, Inc.: Curtailing the Effectiveness of the Force Majeure Clause, Gal, K. M. (1986). Brook. J. Int’l L.12, 243.

Legal Consequences of Force Majeure Under German, Swiss, English and United States’ Law, Rauh, T. (1996). Denv. J. Int’l L. & Pol’y25, 151.

Contracts: Force Majeure Concept or Force Majeure Clauses, Katsivela, M. (2007). Contracts: Force Majeure Unif. L. Rev. ns12, 101. The civil law force majeure concept and force majeure clauses will be the main focus of this article. This study will be geographically limited to France, the Canadian province of Québec and Greece for civil law jurisdictions and the United States and England for common law systems.

Force majeure and hardship under the UNIDROIT principles of international commercial contracts, Perillo, J. M. (1997). Tul. J. Int’l & Comp. L.5, 5.

 

Force majeure and hardship clauses in international commercial contracts and arbitration, Strohbach, H. (1984). J. Int’l Arb.1, 39.

The Ability of a State-Owned Enterprise to Declare Force Majeure Based upon Action of the State, Maravilla, C. S. (2002). Chi.-Kent J. Int’l & Comp. L.2, 82. This paper explains the concept of the force majeur, also known as the Act of God and when it is applied to an agreement.  It also analyses  three criteria that an arbitration panel may weigh when deciding whether a state enterprise can justifiably invoke the force majeure clause in a contract based upon actions of the state that brought about the circumstances that precipitated the force majeure.

Was this article helpful?