Force majeure is a clause in contracts that justifies non-fulfillment of obligations due to uncontrollable circumstances, including natural disasters and man-made obstacles. The clause is not always sufficient justification and should be outlined completely to offer protection for both parties.
Force majeure is a French term often used in contracts. The term means “majeure force” and refers to majeure acts that justify the fulfillment of obligations when circumstances arise beyond the control of the parties. Such clauses are included in a wide variety of contracts, including those for goods and services.
A contract is a binding agreement. When one party fails to meet its obligations, the other party can usually take action. Force majeure is a clause that prevents the parties from acting when obligations are not fulfilled due to acts that could not be controlled. These include acts of nature, such as tsunamis, earthquakes and floods. It also includes man-made obstacles, such as wars, states of emergency, and bans.
The acts listed in the force majeure clauses are not always sufficient justifications for the failure of a party to fulfill its obligations. Even when such acts have occurred or are occurring, it may be possible for the party to enter into the contract. If not, he may be liable for the infringement.
For example, consider an arrangement where a company is supposed to ship goods to a foreign country but learns that a war has broken out and decides not to. If the war takes place in an area related to shipping, the force majeure clause can offer protection for non-compliance with the agreement. If, however, the war is in a distant location that has no relation to or impact on the shipment, failure to deliver is unlikely to be protected by the force majeure clause.
Many people believe that force majeure automatically denotes certain acts, and there are certain acts that are commonly included in such clauses. However, the term does not have an absolute and internationally accepted definition. Some clauses may contain acts that are not included in others. For example, some contracts consider a third party’s breach to be force majeure, while others do not.
For this reason, it’s best that the terms are outlined as completely as possible. It’s also important to make sure that the clause offers protection that covers both parties. Even if one party has a role in the contract that appears to include the most responsibilities and risks, such as that of a supplier, the other party should still seek coverage from the clause.
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