FORCE MAJEURE CLAUSE

A force majeure literally interpreted means higher force, it is an event the happening of which is beyond the control of a party. This is mainly used in contract law. It is advisable that in making a contractual agreement, it should contain a force majeure clause. This is a clause that provides that parties are exempted from performance upon the happening of particular events. This is should be events beyond the control of the parties to the contracts.

Black's Law Dictionary defines force majeure as an event or effect that can neither be anticipated nor controlled. The term includes both acts of nature and acts of people. The case of Atlantic Paper Stock Ltd v St Anne-Nackawic Pulp and Paper Co, [1976] 1 SCR 580, Dickson J in the Supreme Court of Canada in interpreting force majeure stated,

An act of God or force majeure clause ... generally operates to discharge a contracting party when a supervening, sometimes supernatural, event, beyond the control of either party, makes performance impossible. The common thread is that of the unexpected, something beyond reasonable human foresight and skill.

A force majeure should be an event that makes performance inadvisable, commercially impracticable, illegal or impossible. It should be an event which is not reasonably foreseeable and is unlikely to occur. An event that a party may foresee and control or do any other thing to mitigate the damage that may result cannot be a force majeure. For a party to rely on force majeure as the excuse for non performance it is important to prove to the court that he fulfilled all non-excused obligations and that he notified the other party of the likelihood or actual occurrence of the event.

A force majeure clause should contain;

•          Definition. This will state what may be regarded as a force majeure in the operation of the contract. It helps parties understand when failure to perform may be excused. Without the definition part the force majeure clause would generally be inoperative. A force majeure may constitute acts of God or human inflicted events such as war, terrorist activities or strike.

•          Consequences. A force majeure clause must state in clear terms what happens when a force majeure event occurs. Some contracts may state that performance is completely excused while some may provide that delay in performance in excused until performance becomes possible. The consequences of a force majeure event occurring will majorly depend on the contract itself. The context of the contract, the surrounding circumstances of the contract and the purpose of the contract are important considerations when parties are setting down the consequence of happening of a force majeure.

•          Who can suspend performance? Generally the happening of a force majeure event affects performance of the party who is directly affected by it. But it is important for a contract to state in specific terms who may suspend performance in case a force majeure event occurs. While some contracts may provide that it is upon the party who is directly affected by the event, others may provide that performance will only be suspended upon the go ahead of the other party. It is important that whatever route the contract takes, it should be clear that upon the happening of the event, the party affected must inform the other party as soon as possible that his performance will be affected. It is also important to require the party to state when he may resume performance and in what way he may reduce the impact of the force majeure event.

•          What happens if the force majeure event proceeds for more than a specified period? As stated above a contract may excuse parties from performance completely while others may provide for delayed performance. Where for example a contract provides that upon the happening of a force majeure the party will be excused from performance for 2 months, it is important that the contract should state what will happen if the force majeure proceeds beyond 2 months.