Force Majeure - The Clause, The Definition, The Application

Force majeure is literally translated as "superior forces". In contractual terms, it is recognised as the occurrence of an unexpected event / events beyond the control of either contracting party which disrupts the operation of the contract such that the contracting parties are excused from their liabilities and/or obligations under the contract. It is however not intended to excuse any negligence or malfeasance. It can also suspend the performance of an obligation or extend the time to perform the same.

Force majeure is only recognised in English law if there is a force majeure clause in the contract or a reference in the contract to force majeure. This is different from civil law jurisdictions where force majeure can apply regardless.

The purpose and effect of a force majeure clause is to define, as precisely as possible, the circumstances under which a contracting party is released from its contractual obligations. Parties have the ability to negotiate the scope of the clause (i.e. how wide / expansive the clause is) and the specific instances to be included within the clause. For an event to be regarded as a force majeure event, it must fulfil three tests:

Externality – the event / circumstance must be beyond the control of the contracting parties. Unpredictability – the event / circumstance cannot be anticipated / foreseeable / expected. Irresistibility – the event / circumstance is unavoidable. Historically, force majeure events were recognised as forces of nature or acts of God events. However, the clause can and has been expanded to include events which are industry or transaction specific. Certain events created by extraneous human intervention can also fall under the category of force majeure events.

Example: fire, flood, earthquake, storm, hurricane, other nature disasters, war, invasion, act of foreign enemies, hostilities, civil war, rebellion, revolution, insurrection, military or usurped power or confiscation, terrorist activities, nationalisation, government sanction, blockage, embargo, labour dispute, strike, lockout or interruption or failure of electricity or telephone service.

In the event that there is only a reference to force majeure – example "force majeure excepted", what constitutes force majeure is then determined on a case by case basis. This would include an "Act of God" / "forces of nature" event but can also extend to extraneous human intervention events.

The burden of proof rests on the party relying upon...