Using Force Majeure in a Contract
Last Updated: August 25, 2023
Written by
Jasmine Roy
Jasmine Roy, BCS
Jasmine is a professional writer dedicated to serving global communities with honesty, empathy, and accountability. In 2018, she completed her Bachelor of Communication Studies at MacEwan University in Edmonton, Alberta. She's been telling stories and passing on important information to the public ever since. Starting her career in journalism, Jasmine has always had a strong sense of civic engagement and the importance of law. Now, she uses her communication skills as a Marketing Writer and Editor at LawDepot.
Key Takeaways:
- Force Majeure addresses unforeseen events or uncontrollable circumstances that render contract performance practically impossible.
- It's essential to define the clause broadly, as authorities evaluate force majeure events on a case-by-case basis.
- Including a force majeure clause in contracts depends on the nature of the work and potential risks.
A force majeure clause in a contract addresses potential events, like a natural disaster or social crisis, that can prevent someone from completing their job.
This clause can provide a defense against lawsuits for breach of contract. If you’re a self-employed worker who relies on a continuous cycle of clients, consider adding a force majeure clause to your contracts to protect your business and professional integrity.
What is force majeure?
In French, “force majeure” means a superior or irresistible force. It refers to an intervening event that is beyond the control of the contracting parties and renders completion of the contract practically impossible. The typical example is a sudden natural disaster.
Even if people can predict the event, as might be the case with a civil war, if it’s beyond the reasonable control of the parties to fulfill contractual obligations, then it qualifies as a force majeure event.
In other words, the party claiming force majeure must make all reasonable efforts to lessen the effect of the event or unforeseen circumstances on their ability to deliver on the contract. If, despite these best efforts or precautions, the contract cannot be completed, they can rely on the force majeure clause.
Legal contracts can include a force majeure clause as a form of insurance. If an extreme event prevents one of the parties in a contract from fulfilling their obligations, the other party cannot hold them liable. In this case, the parties may agree to suspend contract obligations temporarily or excuse them completely. The parties won’t face the legal repercussions that typically follow after a breach of contract.
What are some examples of a force majeure clause in a contract?
The force majeure clause is a helpful defense when there’s conflict in a partnership, especially if some partners claim that one partner isn’t meeting obligations. If the partner cannot fulfill their duties because of an extenuating situation, they may point to the force majeure clause to avoid a legal battle.
Some of LawDepot’s contract templates include a force majeure clause to protect collaborative business relationships. We include this clause in templates for:
For example, the force majeure clause in our Joint Venture Agreement reads as follows:
“A member will be free of liability to the venture where the member is prevented from executing their obligations under this agreement in whole or in part due to force majeure where the member has communicated the circumstance of that event to any and all other members and taken any and all appropriate action to mitigate that event. Force majeure will include, but not be limited to, earthquake, typhoon, flood, fire, and war or any other unforeseen and uncontrollable event.”
In other words, if an extreme event occurs, the affected party must do everything in their power to ease the negative effects of the event on their contractual obligations. The member must also communicate the situation to all other members in the agreement. If the member takes these steps and proves the event was a force majeure, they may be free of liability if the event prevents them from upholding their end of the agreement.
What is a force majeure event?
A force majeure clause often includes examples of events like fires or floods, but this list is not exhaustive. Still, including specific events in your force majeure clause may make it easier to enforce should the event occur.
An important part of this clause is the definition of a force majeure event, which is often a catch-all phrase such as “any unforeseen and uncontrollable event.” Authorities evaluate these events on a case-by-case basis. As such, the party using this contractual defense must provide evidence of:
- The occurrence of the event
- How it affected them
- How it was beyond their control to mitigate the effects of the event
Courts are unlikely to support a force majeure defense when the contract does not define the term. If you fail to include a force majeure clause, you’ll likely need to use the contractual defense of “frustration of purpose” instead. In this case, the parties may argue that the contract is voidable because its purpose has disappeared due to forces out of their control.
Is a force majeure clause necessary?
Depending on your field of work, including a force majeure clause may or may not be necessary. While an unforeseeable event may make your job difficult, it may not make it impossible. For instance, consultants may not need this clause because technology helps them deliver services regardless of events that restrict physical meetings.
However, if you work in construction, shipping services, or live event performances, consider adding a force majeure clause to your contracts. Natural disasters such as floods, fires, or extreme cold or heat can easily impact workers in these industries. A force majeure clause is important because it protects parties from liability when something makes upholding the terms of a contract impossible.
Keep in mind that a party must prove the impossibility of fulfilling their contract. This burden of proof may make it difficult to invoke the force majeure clause. Talk with a lawyer before using this clause as a defense if you think you’re unable to uphold a contract.
What happens without a force majeure clause?
Without a force majeure clause, the parties in a contract must resolve their conflict through negotiation or legal action.
For example, if an earthquake destroys a large part of a construction project, the parties might agree that the event was out of the construction crew’s control. They might decide to amend their contract to change the project’s expected date of completion. The client might also agree to reimburse the construction company for any damaged equipment or supplies (or they may require the construction company to pay for those losses). If the parties can’t agree on how to resolve the problem, they will likely follow the procedures for dispute resolution outlined in their contract (e.g., mediation or arbitration).
You might need to cancel a contract when you try everything in your power to overcome an obstacle but still cannot uphold the contract. Some contracts outline the repercussions of ending a contract early. For instance, some freelancers require clients to pay a cancelation fee if the client cancels early. Alternatively, the freelancer may reimburse a retainer fee to clients if the freelancer has to cancel.
In either case, refer to your contract to see how to handle a contract breach. If the contract doesn’t have terms to address the situation appropriately, one party may put forward a legal claim to enforce the contract in court.
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