Use the Force? Understanding Force Majeure Clauses
It has been said that, sooner or later, everything old is new again. In the wake of the novel coronavirus pandemic (COVID-19) sweeping the globe in 2020, a heretofore largely overlooked and even less understood nineteenth century legal term has come to the forefront of American jurisprudence: force majeure.
Force majeure has become a topic du jour in the COVID-19 world with individuals and companies around the world seeking to excuse non-performance of contractual obligations on the basis that the pandemic and its impact constitutes a force majeure. But are those claims well-founded? The answer, to the frustration of practitioners and clients, as usual, depends on the facts of each case.
It is worth noting at the outset that the very notion of force majeure is at the same time both radical and entirely sensible, obvious even. It is radical in the sense that sophisticated parties to complex commercial contracts, where nearly every provision is negotiated in great detail and to great expense, would permit the possibility of the other party’s excused non-performance based on an event both sides believe is unlikely to occur. And yet it is sensible because centuries of business dealings have taught that sometimes things happen beyond the parties’ control, and what else are the parties supposed to do about it? This Article looks at that dichotomy and the tension force majeure creates when put into practice.
But first, this Article begins with the history of the law of force majeure, dating back to its mid-sixteenth century European beginnings, and then proceeds to discuss some of the underlying purposes and prevalence of force majeure clauses in various industries. Next, this Article surveys the application of force majeure throughout the course of American jurisprudence, with a focus on seminal cases and events in modern history. Viewing these cases through the lens of the COVID-19 crisis and other events that periodically, yet unexpectedly, occur, this Article details what courts may examine in force majeure litigation and canvasses the types of evidence claimants and defendants can marshal to argue their cases. Finally, this Article reviews considerations practitioners may contemplate when drafting future force majeure provisions.
Republished with permission. The chapter, "Use the Force? Understanding Force Majeure Clauses," was published in the American Journal of Trial Advocacy Volume 44:1 in March of 2021.
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