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What ‘Force Majeure’ Means, and Why You Need to Know

A nationally recognized reporter, writer, and consumer advocate, Ed Perkins focuses on how travelers can find the best deals and avoid scams.

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Perkins was founding editor of Consumer Reports Travel Letter, one of the country's most influential travel publications, from which he retired in 1998. He has also written for Business Traveller magazine (London).

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Before editing Consumer Reports Travel Letter, Perkins spent 25 years in travel research and consulting with assignments ranging from national tourism development strategies to the design of computer-based tourism models.

Born in Evanston, Illinois, Perkins lives in Ashland, Oregon with his wife.

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When you purchase travel from an airline or another operator, you enter into a contract for a service or goods. And if some unforeseen calamity prevents the seller from delivering the promised goods or services, the seller can claim “force majeure” as a basis for terminating the contract without incurring any liability for breach of contract.

The term is a dubious one taken from the 1804 Code Napoleon, and refers to occurrences beyond the reasonable control of a party to a contract that prevents fulfillment. It’s similar to “acts of God” and “frustration of purpose.” As such, the concept extends back centuries in common law.

It usually refers to natural disasters, and most would consider the COVID-19 pandemic a force majeure. So if the pandemic prevents an airline, hotel, or some other travel supplier from fulfilling a contract with you, you can’t really file a legal claim for breach of contract: That’s a fair and traditional use of force majeure.

But, some dishonest suppliers claim that force majeure means they don’t have to refund the money you’ve paid them when they can’t fulfill their end of the contract. So far there has been nothing upholding that position; if there’s force majeure, you’re still entitled to your money back. Don’t fall for it if some supplier tries to get out of refunding your money by claiming force majeure, but also don’t assume you have any right to the service or to file a claim against an airline.

As we recently reported in our guide to canceling a trip during the pandemic : The airline companies are not directly liable for disruptions caused by COVID-19; therefore, passenger-rights groups like AirHelp have said they will  not be pursuing additional compensation  for affected flights.

More from SmarterTravel:

• Cancel for Any Reason Insurance, Explained
• 14 Booking Sites’ COVID-19 Cancellation Policies
• Travel Insurance Coverage: 17 Things Your Policy Won’t Cover

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Consumer advocate Ed Perkins has been writing about travel for more than three decades. The founding editor of the Consumer Reports Travel Letter, he continues to inform travelers and fight consumer abuse every day at SmarterTravel.

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• Force Majeure Clause

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Contract Clauses

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Force majeure clause defined.

Force majeure clauses allow a party to leave a contract temporarily or permanently, in whole or in part, for catastrophes that were not foreseeable. These catastrophes must cause severe disruption to fulfill a contractual obligation. If the event meets the term in the force majeure clause, both parties can end the agreement without penalty.

Here is another article that defines force majeure.

Force Majeure Clause Explained

A force majeure clause triggers when extraordinary circumstances exist. It’s derived from French Law and translates to “major force.” They come into effect when a party cannot follow through on pacta sunt servanda, meaning “agreements must be kept” in Latin.

Triggering events may include:

• Earthquakes
• “Acts of God”

You can find out more about force majeure clauses by checking out this page .

Force Majeure Clauses & COVID-19

Force majeure clauses may not apply to the coronavirus pandemic. You must also reasonably prove that you can’t meet the agreement. Review the provisions of your contract and work with attorneys to determine if the force majeure provision applies to your situation.

For more information about force majeure clauses & COVID-19, check out this article .

Purpose of Force Majeure Clause

The purpose of force majeure clauses is to release a party when they can no longer fulfill the obligations, usually due to a severe, unforeseen event.

Force Majeure Clause Examples

Examples of situations that may require force majeure clauses include:

• Example 1: Planning an event or concert
• Example 2: Catering a wedding reception
• Example 3: Private photography sessions
• Example 4: Professional and private partnerships
• Example 5: Insurance policies

Force Majeure Clause Samples

Sample 1 - from service agreement :.

13.1  Force Majeure  If and to the extent that a Party’s performance of any of its obligations pursuant to this Agreement is prevented, hindered or delayed directly or indirectly by fire, flood, earthquake, elements of nature or acts of God, acts of war, terrorism, riots, civil disorders, rebellions or revolutions, or any other similar cause beyond the reasonable control of such Party (each a “Force Majeure Event”), and such non-performance, hindrance or delay could not have been prevented by reasonable precautions, then the non-performing, hindered or delayed Party shall be excused for such non-performance, hindrance or delay, as applicable, of those obligations affected (the “Affected Services”) by the Force Majeure Event for as long as the Force Majeure Event continues and, except as otherwise provided in this Section, such Party continues to use its commercially reasonable efforts to recommence performance whenever and to whatever extent possible without delay, including through the use of alternate sources, workaround plans or other means. The Party whose performance is prevented, hindered or delayed by a Force Majeure Event shall promptly notify the other Party of the occurrence of the Force Majeure Event and describe in reasonable detail the nature of the Force Majeure Event. During the Force Majeure Event, WSI will continue to pay IBM’s charges for the Services.

Reference :

Security Exchange Commission - Edgar Database, EX-10.1 2 dex101.htm SERVICES AGREEMENT , Viewed March 31, 2021, < https://www.sec.gov/Archives/edgar/data/719955/000119312504210939/dex101.htm >.

Sample 2 - From Platform Service Agreement :

Force Majeure . Neither party shall be held responsible for any delay or failure to perform any part of this Agreement to the extent such delay or failure results from any cause beyond its reasonable control and without the fault or negligence of the party claiming excusable delay or failure to perform, such as acts of God, acts of war or terrorism, extraordinary acts of the United States of America or any state, territory or political subdivision thereof, fires, storms, floods, epidemics, riots, work stoppages, strikes (work stoppages and/or strikes of any of the parties to this Agreement are specifically excluded from the language of this section), embargoes, government restrictions, exchange or market rulings, extreme market volumes or volatility, suspension of trading (whether declared or undeclared), adverse weather or events of nature. Upon an occurrence of an event of force majeure, Envestnet cannot insure uninterrupted or error free service or access to the Platform Services or the Envestnet Materials and there may be periods where access is delayed, limited or not available. Envestnet shall use commercially reasonable efforts to provide Platform Services to FundQuest and FQ Clients in accordance with its business continuity policy. A copy of the current business continuity policy shall be provided to FundQuest prior to the signing of this Agreement.

Security Exchange Commission - Edgar Database, EX-10.8 4 dex108.htm PLATFORM SERVICES AGREEMENT , Viewed March 31, 2021, < https://www.sec.gov/Archives/edgar/data/1337619/000119312510151843/dex108.htm >.

Sample 3 - From Platform Service Agreement :

21.1 Force Majeure Events . Except to the extent provided in this Agreement, no Party shall be liable for any default or delay in the performance of its obligations under this Agreement (i) if and to the extent such default or delay is caused, directly or indirectly, by acts of terrorism, fire, flood, earthquake, elements of nature or acts of God, riots, civil disorders, or any other such similar cause beyond the reasonable control of such Party, and (ii) provided the non-performing Party is without fault in causing such default or delay, and such default or delay could not have been prevented by reasonable precautions and could not reasonably be circumvented by the non-performing Party through the use of alternate sources, workaround plans or other means (including with respect to Provider, by Provider meeting its obligations for performing disaster recovery services as described in this Agreement). Any such event or occurrence as described in this Section 21.1 shall be deemed a “Force Majeure Event.”

Security Exchange Commission - Edgar Database, EX-10.2 76 dex102.htm MASTER SERVICE AGREEMENT , Viewed March 31, 2021, < https://www.sec.gov/Archives/edgar/data/820609/000119312510160027/dex102.htm >.

Sample 4 - From Hosted Service Agreement :

Force Majeure . Neither party shall be responsible for any failure to fulfill its obligations hereunder due to causes beyond its reasonable control, including without limitation acts or omissions of government or military authority, acts of God, shortages of materials, transportation delays, fires, floods, diseases, labor disturbances, riots, or wars provided that it gives prompt notice to the other of its invocation of this provision and make diligent efforts to resume its performance despite such force majeure. For purpose of clarification, Customer acknowledges, in the event that recommendations are issued by: (i) NAVITAIRE’s parent company “Global Watch Program”

Security Exchange Commission - Edgar Database, EX-10.3 7 dex103.htm HOSTED SERVICES AGREEMENT , Viewed March 31, 2021, < https://www.sec.gov/Archives/edgar/data/1498710/000119312511049608/dex103.htm >.

Common Contracts with Force Majeure Clauses

Common contracts with force majeure clauses include:

• Event contracts
• Wedding contracts
• Insurance policies
• Photography contracts
• Service contracts
• Operating agreements

Force Majeure Clause FAQs

Force majeure clauses and laws are different for every state. Here are a few force majeure clause FAQs to help you understand them better:

Should I add a force majeure clause to my client contract?

You should add a force majeure clause to your client contract. Any industry or business can face significant disruptions at any time without warning. Protect yourself with a force majeure clause.

Is COVID-19 a force majeure event?

COVID-19 is a force majeure event in some instances and states. Speak with contract lawyers to help you determine if coronavirus applies to your situation.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

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Q&A on COVID-19-related force majeure claims

United Kingdom |  Publication |  May 2020

Introduction

What is force majeure, what steps do i have to take to rely on force majeure, what are the consequences of calling force majeure, do i need to take steps to mitigate or avoid the force majeure event, can you call force majeure in anticipation of a force majeure event, if there is another reason as well as the force majeure event that is preventing performance, can i still rely on the force majeure event, what happens if i wrongly call a force majeure event, what should i do if i receive a force majeure notice, what if there is no force majeure clause in my contract.

We asked a group of our dispute resolution lawyers about the questions most frequently asked by their clients in relation to force majeure claims. As COVID-19 has and will continue to affect every industry, decision makers should have an understanding of how the concept operates and whether it can offer relief in these challenging times.

The purpose of a force majeure clause is to relieve a party from performing its contractual obligations when an unexpected, external event has occurred which prevents it from performing.

English law does not have a principle of force majeure. As a result, the circumstances in which force majeure will apply will depend on (i) the contract including a force majeure clause and (ii) the precise wording of that clause.

Generally the following will need to apply:

• A force majeure event has arisen.
• The party has been prevented (or delayed or hindered depending on the contract wording) from performing as a result of that event.
• The event was beyond the control of the party.
• There were no reasonable steps a party would take to avoid the event or mitigate its effects.

Check governing law

Check the governing law of the contract as the rules of force majeure vary between jurisdictions.

Check the definition of force majeure event

Generally a force majeure event is a supervening event which is outside of the control of the affected party. There are various approaches to defining what constitutes a force majeure event:

• Some contracts will use general wording such as “a supervening event, which is outside of the control of the affected party”.
• Others will set out an exhaustive list of specific events, which may include strikes, storms, floods, etc.
• A common hybrid is to include an illustrative list of events preceded or followed by general, sweeper wording such as “and any other event beyond the affected party’s control”.
• Finally the contract may simply refer to a “force majeure event”. As there is no general principle of force majeure in English law, what constitutes a force majeure event will be a matter of contractual interpretation.

In the COVID-19 context, terms such as “disease”, “epidemic” and “pandemic” which are often listed as force majeure events are a natural starting point when it comes to seeking relief. Other less obvious, but equally common, terms such as “natural disaster” and “Act of God” may also cover COVID-19 impacts. However, it is often the steps which have been taken by governments and other authorities in response to COVID-19 which actually prevent or hinder contractual performance rather than the virus itself. In those circumstances, if the clause includes wording such as “government acts” or similar this may be a better ground to rely on.

Whilst it will always depend on the specific drafting, it is generally accepted that the ejusdem generis rule does not apply to the interpretation of force majeure clauses. This means that where there is an illustrative list of events, followed by more general, sweeper wording, the wider wording will not generally be interpreted as only catching events similar to those specifically listed.

An economic downturn, change in market price or increase in the cost of performance will not typically amount to a force majeure, even if that change is very substantial. This means that a party faced with performing a contract which has become economically unfavourable as a result of COVID-19 is unlikely to be entitled to force majeure relief.

Finally, check whether the contract wording excludes foreseeable events from the definition of force majeure. If it does and the force majeure event, e.g. COVID-19, was foreseeable when the contract was entered into, you may not be entitled to contractual relief.

Establish causation

Establishing causation is essential to obtaining force majeure relief. You must be able to show that the force majeure event has prevented (or hindered or delayed, depending on the contract wording) you from performing your contractual obligations. It is not enough that the force majeure event has arisen.

Carefully check the contract test – does it state that performance must be prevented or does it extend to events which delay or hinder performance. “Prevented” or “rendered unable” require proof that performance has become physically or legally impossible, not only difficult or unprofitable. “Hindered” and “delayed” set a lower hurdle.

The force majeure event must be the only or substantial cause of the inability to perform under the contract. If there is more than one reason for non-performance and that other reason is not a force majeure event, relief may not be available. For example, a party who claims force majeure as a result of the COVID-19 pandemic but who would not have performed the contract anyway because of the substantial drop in the oil price, is unlikely to be able to claim force majeure.

In COVID-19 scenarios, causation can be difficult to establish, as governmental measures change and new emergency legislation is implemented.

Check notice provisions

Failing to comply with notice provisions may mean force majeure relief is not available. Most clauses contain an express obligation to notify and some require continued provision of information for the duration of the force majeure event.

Key points to check in any notice provision are:

• Timing restrictions, e.g. must be served within two days of the force majeure event occurring
• Any supporting information to be provided to the counterparty
• The method of service of the notice
• Any ongoing notification obligations

The consequences of claiming force majeure will depend on the contract. Most often, we see suspension or termination of the contract, but you may also encounter compensation or negotiation provisions. Many force majeure clauses are layered – meaning that the type of relief available changes with time or at the option of the parties.

The most common consequence is suspension of rights and obligations for the duration of the force majeure event for either or both parties. In practice, this grants the affected party an extension of time for performance until the event impacting its ability to do so ceases.

The parties should check how soon after the force majeure event the affected party is required to resume performance. This recovery period can be critical. For example, where manufacturing plants have been closed down as a result of COVID-19 measures, it may take a considerable time to return to previous levels of production, even after official measures are relaxed. As a result, the affected party may not be able to immediately return to fulfilling its contracts and will continue to require relief beyond the official lockdown.

Termination

Depending on the contract, termination can either arise as an automatic consequence of claiming force majeure or it may give the parties discretion to terminate, normally after a specified period of time.

If you choose to exercise a right to terminate, you should comply with the termination requirements of the contract, including any notification provisions. Do not forget to check how payments or performance already made will be dealt with under the contract.

Compensation

In rarer cases, the contract will allow the affected party to claim financial compensation from the non-affected party for costs associated with the force majeure event.

In those circumstances, carefully check the costs that the affected party is entitled to, how these should be calculated and what (if any) mitigation obligations apply. If you are the claiming party, do not assume that these costs will be easy to recover in the current economic climate.

Negotiation

A final and arguably the most challenging alternative, particularly in circumstances changing as dynamically as the COVID-19 environment, is an obligation for the parties to negotiate amendments to the contract to address the impact of force majeure.

This is challenging for a number of reasons, the most salient one being whether an agreement to negotiate can be enforceable under English law. It will depend on the drafting and how precise the requirement to negotiate is. You should always check the parameters of the clause carefully in order to establish whether you are actually under an enforceable obligation to agree changes to the contract or simply one to try to negotiate.

If there are steps that a claimant party could have taken to avoid or mitigate the effects of the force majeure event, for example by some alternative method of performance, it will generally be expected to have done so.

Contracts will often include express mitigation wording requiring a party to “take reasonable steps” , “take all reasonable steps” or “use best endeavours” to avoid the force majeure event or mitigate its effects. Whilst it will depend on the factual circumstances (including, for example, industry norms/practices) and wider drafting, generally “all reasonable endeavours” will require a party to do more than “reasonable steps” and in turn “best endeavours” will entail more than “all reasonable steps” .

You should also check whether the contract requires you to take any specific mitigation steps, for example, to take delivery at an alternative location or source alternative supplies.

Finally, it is important that you document all decisions and their rationale. Keeping relevant meeting minutes on file is a prudent and a highly recommended step. This is particularly important as the global response to COVID-19 and governmental guidance is changing frequently, which may mean that without a documented process, decisions taken one day may be seen as less reasonable in hindsight.

Calling force majeure in anticipation of a force majeure event occurring is a complex question of causation. It will always depend heavily on the particular circumstances of the case and the force majeure clause in question.

Generally, a party is more likely to be successful in its anticipatory force majeure claim if at the time a reasonable person would have taken the view that the event would lead to a sufficiently serious interference with the affected party’s ability to perform for it to claim force majeure.

As stated above, under English law a force majeure event must be the sole or substantial cause of the affected party’s inability to perform under the contract.

In practice, if there are other factors preventing your performance, for example falling commodity prices or fall in demand, you are unlikely to be entitled to relief. Always ask yourself whether the basis of your claim is defensible. Document your decision making and provide comprehensive evidence to your counterparty with the force majeure notice. If you are simply looking to get out of what now looks like a bad deal, force majeure is unlikely to be available.

Triggering termination rights

Many contracts will have express termination rights. Failure to perform a material obligation under the contract without excuse may permit the innocent party to seek to terminate the contract. Likewise, at common law, failure to perform your contractual obligations which go to the root of the contract could allow the counterparty to terminate for repudiatory breach and sue for damages.

Late Performance

Even if the innocent party does not have a right to terminate the contract as a result of you incorrectly calling force majeure, there may be other consequences arising from your late performance such as damages for breach of contract or self-help remedies including liquidated damages, acceleration, forfeiture, etc.

Check the notice requirements

Check compliance of the claimant party with contract notice requirements, e.g. was the notice served on time and to the correct addressee. If a notice is defective, and the notice requirements amount to conditions precedent, the claiming party may not be entitled to relief.

We have seen authorities in some jurisdictions issuing force majeure certificates to companies to use as “evidence” of force majeure. An English court or tribunal is unlikely to treat a certificate of this kind as definitive and would instead undertake the usual multi-stage inquiry to verify whether the force majeure contract test has been met.

Question causation

Question causation and consider whether there might be another reason why the counterparty is not performing under the contract. Recall that force majeure event must be the sole or substantial cause of its inability to perform.

Check mitigation requirements

Check if the party trying to claim force majeure has taken necessary mitigation steps and demand evidence of actions taken.

Consider the bigger picture

Understand the potential domino effect on your other contracts (i.e. having to claim force majeure yourself as a result of this claim) and consider the force majeure claim in the context of the commercial relationship with the counterparty. In some cases, companies will use a force majeure claim or a threat of termination to influence the commercial relationship or re-negotiate the contract.

Even if there is no force majeure clause in the contract there may be other relief that you are entitled to as a result of the impact of COVID-19.

Change in law

Some contracts include change in law clauses which protect the parties if a change in law makes performance illegal, impossible or more onerous. With many governments and other authorities having enacted emergency legislation in response to COVID-19, relief may available under a change in law provision.

Frustration

If there is no force majeure relief under the contract, the common law doctrine of frustration may apply. A contract may be frustrated where a supervening event makes performance impossible, illegal or something radically different to that agreed when the contract was entered into. The effect of frustration is that the contract comes to an end automatically (i.e. without any further steps taken by either party), which can be a very blunt outcome.

Price Reviews

Some contracts, for example, long-term sale and purchase agreements for commodities, may provide for price renegotiation at either fixed milestones during the life of the contract or where there has a been a major change in the particular market, which makes the contract price “out of step” with the market.

Termination clauses may provide the parties with rights to terminate a contract under specific circumstances or at convenience.

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force majeure

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Force majeure is a provision in a contract that frees both parties from obligation if an extraordinary event directly prevents one or both parties from performing. A non-performing party may use a force majeure clause as excuse for non-performance for circumstances beyond the party's control and not due to any fault or negligence by the non-performing party. However, mere impracticality or unanticipated difficulty is not enough to excuse performance. Indeed, courts generally do not recognize economic downturn as a force majeure event. This is because economic hardships occur regularly in business , and as a result, may be appropriately and preemptively dealt with by allocating its risk through the terms of the contract. As such, force majeure events are often labeled as " acts of god " and include both natural and man-made events like fires, floods, storms, war, and labor disputes. 

Some jurisdictions, like New York , interpret force majeure clauses narrowly and only grant excuses if the specific event is stated in the clause. As such, parties may agree to broaden or narrow the terms and conditions of performance. Still, when interpreting force majeure clauses, courts interpret them based on the parties' circumstances and refuse to enforce overtly broad force majeure clauses. For example , New York courts have recognized the COVID-19 pandemic and the resulting bar on non-essential business activity as a sufficient force majeure event to excuse performance where the term "natural disaster" was expressly stated as a circumstance that would trigger the clause. On the other hand, courts have refused to extend force majeure clauses (even those related to COVID-19-related hardships) where the underlying clause was written to cover any unforeseen or uncontrollable change, and where there was doubt to whether the event (as opposed to economic considerations) directly prohibited the non-performing party's nonperformance (see, e.g, Rudolph v. United Airlines Holdings, Inc. 519 F.Supp.3d 428 ).

Lastly, force majeure clauses are among a number of defenses that can be asserted in response to an action for nonperformance, such as the general defense of impossibility and frustration of purpose . 

[Last updated in December of 2021 by the Wex Definitions Team ]

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• THE LEGAL PROCESS
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An Update On The Enforceability Of Force Majeure Clauses In The COVID-19 Era

Contributor.

In March of 2020 at the beginning of the COVID-19 pandemic, force majeure clauses became a hot topic of conversation. 1 Contracting parties suddenly had an interest in dusting off the boilerplate provisions of their pre-COVID contracts to determine whether, and to what extent, their force majeure clauses could excuse performance. In the months since March 2020, courts in several jurisdictions heard cases and interpreted force majeure clauses without much guidance from prior case law. While case law in the area is still evolving, a few takeaways have emerged.

As a reminder, courts generally take a three-step approach to interpreting force majeure clauses. First, courts will look at the specific language of a force majeure clause and how the clause defines events constituting force majeure. Second, a court will determine whether the defined event actually caused the delay or nonperformance of the contract. While COVID-19 is a great excuse for avoiding the dentist or dinner with the in-laws, that justification likely will not excuse your performance under a contract, unless you can demonstrate a causal connection between the pandemic and your nonperformance. Finally, courts will look at what relief your force majeure clause provides. Some clauses may allow you to delay performance until the defined event ends; other clauses might allow a party to cancel the contract altogether.

Notwithstanding the far-reaching effects of the pandemic, many courts interpret force majeure clauses strictly. For example, a Hawaiian court denied a refund of a significant deposit paid by a party planning a large-scale in-person event that was ultimately canceled because the force majeure provision of the applicable contract did not explicitly provide for a refund of deposits made. 2  The Plaintiff in the case also failed to properly allege the elements for a breach of contract. 3

The tendency to strictly interpret force majeure clauses often arises with the issue of causation. Parties often lose on the causation factor by citing economic hardship from COVID-19 as the reason for their nonperformance.4 Although COVID-19 has unquestionably caused global economic hardship, such hardship is generally not recognized as a force majeure event. Instead, the litigants who were successful in invoking force majeure protection were those who were able to connect the dots between the pandemic and their inability to perform.

Despite the strict interpretations employed by most courts, some courts have been willing to fashion relief that may not entirely line up with a written contract. In  In re Hitz Rest. Grp. 5 , an Illinois Bankruptcy court interpreted a force majeure clause in a lease to partially excuse performance, reducing a restaurant owner's obligation to pay rent in proportion to revenue lost due to an executive order shutting down in-person dining but encouraging carry-out, curbside and delivery service. 6

As these cases illustrate, interpretation of force majeure clauses remains somewhat unpredictable. One key takeaway is, that prior to the COVID-19 pandemic, force majeure clauses were often sloppily written and failed to allocate risk in a manner acceptable to the contracting parties. Where these clauses were often boilerplate and repurposed from agreement to agreement, contracting parties spent little to no time writing or negotiating them. Businesses and customers alike have realized the effects of a poorly drafted force majeure clause with countless examples of the loss of significant sums of money. With the realities of the last two years upon us, parties entering into contracts should be sure to review and update their force majeure clauses to ensure their long-term viability.

1  See, e.g.  Reber, Lauren,  Does Covid-19 qualify as an event of Force Majeure under your lease? , ParsonsBehle.com (April 3, 2020), https://parsonsbehle.com/insights/does-covid-19-qualify-as-an-event-of-force-majeure-under-your-lease; Leeman, Alex,  Contracts and COVID-19: What is Force Majeure Anyway? , ParsonsBehle.com (March 17, 2020), https://parsonsbehle.com/insights/contracts-and-covid-19-what-is-force-majeure-anyway.

2  NetOne, Inc. v. Panache Destination Mgmt., Inc. , No. 20-CV-00150-DKW-WRP, 2020 WL 3037072, at *5 (D. Haw. June 5, 2020).  Lantino v. Clay LLC , No. 1:18-CV-12247 (SDA), 2020 WL 2239957, at *3 (S.D.N.Y. May 8, 2020) (refusing to recognize economic hardship caused by COVID-19 as an excuse for performance under a settlement agreement).

3  Id.  at *4.

4  See, e.g. ,  Palm Springs Mile Assocs., Ltd. v. Kirkland's Stores, Inc. , No. 20-21724-CIV, 2020 WL 5411353, at *2 (S.D. Fla. Sept. 9, 2020);  Lantino v. Clay LLC , No. 1:18-CV-12247 (SDA), 2020 WL 2239957, at *3 (S.D.N.Y. May 8, 2020) (refusing to recognize economic hardship caused by COVID-19 as an excuse for performance under a settlement agreement).

5 616 B.R. 374 (Bankr. N.D. Ill. 2020).

6  Id.  at 379.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Coronavirus (COVID-19)

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What Is Force Majeure?

Elements of the clause, invoking force majeure, force majeure vs. pacta sunt servanda, the bottom line.

• Business Jargon

What Is a Force Majeure Contract Clause?

Force majeure is a clause included in contracts to remove liability for unforeseeable and unavoidable catastrophes interrupting the expected timeline and preventing participants from fulfilling obligations . These clauses generally cover natural disasters like hurricanes, tornadoes, and earthquakes, and human actions, such as armed conflict and human-made diseases.

Key Takeaways

• Force majeure is a clause included in contracts to remove liability for unforeseeable and unavoidable catastrophes that prevent participants from fulfilling obligations.
• These clauses generally cover natural disasters and catastrophes created by humans.
• In some jurisdictions, the event must be unforeseeable, external, and irresistible.

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• An event must be unforeseeable
• The circumstances must be external to the contract parties
• The event must be serious enough to render it impossible for the party to perform contractual obligations

For events to constitute the use of force majeure, they must be unforeseeable, external to contract parties, and unavoidable. Force majeure means “greater force” and is related to an act of God , an event for which no party can be held accountable. These concepts are defined and applied differently depending on the jurisdiction.

Suppose an avalanche destroys a supplier’s factory in the French Alps, causing long shipment delays and leading the client to sue for damages. The supplier might employ a force majeure defense, arguing that the avalanche was an unforeseeable, external, and unavoidable event—the three tests applied by French law. Unless the contract specifically named an avalanche as removing the supplier’s liability, the court may decide that the supplier owes damages.

The concept of force majeure originated in French civil law and is an accepted standard in many jurisdictions that derive their legal systems from the Napoleonic Code. In common law systems, such as those of the United States and the United Kingdom, force majeure clauses are acceptable but must be more explicit about the events that would trigger the clause.

Force majeure conflicts with the concept of “pacta sunt servanda” (Latin for “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. Human threats like cyber, nuclear, and biological warfare capabilities or natural disasters have raised questions about what is and is not foreseeable in a legal sense.

If a natural or other disaster repeats or reoccurs, it may not be considered unforeseeable.

Is Force Majeure Always Recognized and Upheld?

The International Chamber of Commerce has attempted to clarify the meaning of force majeure by applying a standard of “impracticability,” meaning that it would be unreasonably burdensome and expensive, if not impossible, to carry out the terms of the contract. It can be difficult to prove that an event is unforeseeable and serious enough to void a contract. In any jurisdiction, contracts containing specific definitions that constitute force majeure—ideally ones that respond to local threats—hold up better under scrutiny.

What Are Examples of Force Majeure?

Events that could trigger a force majeure clause include war, terrorist attacks, a pandemic, or natural disasters that fall under the “act of God” category, such as a flood, earthquake, or hurricane.

Does a Pandemic Like COVID-19 Qualify for Force Majeure?

The 2020 pandemic opened new litigations regarding force majeure clauses. In Virginia, Regal Cinemas theaters ceased operations because of the pandemic. The United States District Court for the Western District of Virginia ruled that the force majeure clause in the lease executed between the parties only applied if “the Complex or other improvements on the Property, or any part thereof, are  damaged or destroyed  by fire, flood, natural causes, or other casualties[.]”  The COVID-19 pandemic did not excuse Regal Cinemas from its performance under its contract. A ruling in favor of the University of Vermont also found that because its “closure” was due to the COVID-19 pandemic, and not another catastrophe, the university did not have to issue refunds for housing or meal plans.

Force majeure clauses enable parties to better manage risk and protect themselves if something unthinkable happens. To implement the clause and abandon provisions of a contract or actions under the contract, an event must be unforeseeable, external to the contract parties, and serious enough to render it impossible for the party to perform contractual obligations.

Latham & Watkins. “ Impact of COVID-19 on French Law Governed Contracts: Update ,” Page 1.

Cornell Law School, Legal Information Institute. “ Force Majeure .”

American Journal of International Law, via JSTOR. “ The Principle Pacta Sunt Servanda and the Nature of Obligation Under International Law .”

International Chamber of Commerce. “ ICC Force Majeure and Hardship Clauses: March 2020 ,” Page 1.

American Bar Association. " Force Majeure Clauses in the Aftermath of the Covid-19 Pandemic and the Implications for Government Entities ."

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