A superior force. An act of God. Sometimes, things that are out of your control happen which make your performance or obligations under a contract illegal, impossible, or extremely difficult. In the contract world, the clause used to control this risk is called force majeure. According to Black’s Law Dictionary force majeure is “[a]n event or effect that can be neither anticipated nor controlled.” Based on the force majeure clause in your contract, when an event, significant enough to trigger force majeure occurs, your obligations under a contract could be postponed, amended, or even completely cancelled. While most of the events that trigger force majeure are things like war, riots, floods, and fires, based on your industry it could also be things like strikes, prolonged shortages of supplies, and certain governmental actions. It’s not hard to imagine an event where vast numbers of industries were completely shut down.
An added complication though, is that unlike other contract terms, there is no real recognized and accepted definition of a force majeure event. Unless it’s defined in your contract, a Court will have to determine if an event applies; this can add significant time and expense. Unfortunately, because the force majeure clause is so rarely used, it is often considered “boilerplate,” which are those common clauses in a contract that few people actually read. This means that a standard force majeure clause is routinely dropped into a contract with little thought. Learning what rights you do, or don’t have pursuant to your contract is something that should be done when the contract was drafted, not after things have gone wrong.
Having a well thought out force majeure clause in your contract is especially important because there is no implied protection against such events at common law. While there are other avenues to excuse contract performance, such as frustration of purpose, or impossibility, these other avenues have higher thresholds and costs to maintain a successful claim. It’s also important to know that a force majeure event cannot be used to escape liability or avoid harms that would have occurred regardless. The breach of contract must have actually been caused by the force majeure event. If someone wasn’t going to be able to meet their obligations under a contract for an unrelated reason, the existence of the force majeure event does not give them a free pass.
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