Force Majeure Meaning in Contract Law: An Overview
Force majeure is a legal term that refers to events or circumstances that are beyond the control of the parties to a contract, which makes it impossible for them to fulfill their obligations under the contract. This concept is an important one in contract law, as it protects parties from liability when events beyond their control make it impossible for them to perform their contractual obligations.
The term Force majeure originates from the French language and it literally means “superior force”. In the United States, contractual force majeure clauses are generally governed by state law. Therefore, the definition of force majeure and its scope may vary from state to state.
Examples of force majeure events or circumstances may include natural disasters such as earthquakes, hurricanes and floods, acts of war or terrorism, strikes, labor disputes, or government actions such as lockdowns and travel restrictions. Essentially, any event or circumstance that is unforeseeable, unavoidable, and beyond the control of the parties may be considered force majeure.
In contract law, force majeure clauses are usually included in contracts to help parties avoid liability for non-performance of their obligations under the contract due to force majeure events or circumstances. These clauses are designed to outline the specific events or circumstances that would be considered force majeure, and what the consequences will be if such events occur.
The consequences of a force majeure event may vary depending on the terms of the contract and applicable law. In some cases, a force majeure event may result in the suspension of the contractual obligations until the event has passed, or it may allow for the termination of the contract if the event continues for a prolonged period. In other cases, a force majeure event may excuse the party from their contractual obligations entirely, without any liability or damages.
It is important to note that the party seeking to rely on a force majeure clause in a contract must be able to demonstrate that the event or circumstance in question was indeed beyond their control and made it impossible for them to perform their obligations under the contract. In many cases, the party may need to provide evidence to support their claim of force majeure.
In conclusion, force majeure clauses are an important tool for parties to protect themselves from liability when events or circumstances beyond their control make it impossible to perform their obligations under a contract. Given the impact of COVID-19 on businesses across the globe, the force majeure clause has gained even more importance in contract negotiations. Nevertheless, the scope of the clause and its interpretation is still subject to state law and applicable case law. Therefore, it is important for parties to carefully consider the language used in the contract and seek legal advice in order to ensure that their interests are protected.
