What is a Force Majeure Clause?

Force majeure is French for “superior force.” This clause, also sometimes known as the “Act of God” provision, is aptly named, as it governs what happens when extreme events outside of any contract party member’s control significantly alter the circumstances of previously agreed-upon obligations.

The force majeure clause has received renewed attention in the wake of COVID-19, when individuals and companies used it to argue that the global pandemic rendered it impossible or at least highly impractical for them to fulfill their contract obligations.

Despite its sudden return to the forefront of legal discourse, the force majeure clause is an oft-misunderstood and misapplied concept. Understanding force majeure before you add it to a contract is very important, because if you misuse the clause, you may not be protected by it even in the unlikely event you have to invoke it.

Here’s everything you should know about the force majeure clause, including why it exists, why it matters, and what it covers.

What is the force majeure clause?

The force majeure clause is a contract provision that relieves involved parties from performing their contract obligations if extreme circumstances or “major unforeseen events” outside of their control arise that would make performing these obligations impossible, inadvisable, or dangerous.

Classic examples of the sorts of extreme circumstances that a force majeure clause could cover include natural disasters, the sudden outbreak of war, a terrorist attack, or, of course, a pandemic.

The International Chamber of Commerce has attempted to further clarify the meaning of force majeure by applying a standard of “impracticability” to it. This states that the force majeure clause comes into effect if the events outside of the party’s control make it “unreasonably burdensome and expensive, if not impossible, to carry out the terms of the contract.”

Why is the force majeure clause important?

The purpose of the force majeure clause is to protect contracting parties from breach of contract liability in situations when carrying out the contract obligations would be impractical or impossible.

Notably, a force majeure clause is not necessarily required for so-called acts of God to excuse parties from their contract obligations. In cases where a contract does not have a force majeure clause, court rulings tend to default to common law principles, where the court will decide whether the event in question genuinely prevents the fulfillment of contract obligations.

The major difference in such cases is that, without a force majeure clause, the party that wants to be released from contract obligations has the burden of proof, which means that this party must prove their argument is correct. If the other contracting parties do not agree, this could lead to litigation.

For this reason, proactively including a force majeure clause in contracts where they may be pertinent can be a good way to avoid later disagreements. 

When does a force majeure clause come into effect?

There can be significant ambiguity in the application of the force majeure clause, and different jurisdictions may interpret it in different ways. For example, New York is known to interpret force majeure narrowly, only allowing it as a legitimate excuse if the specific event is mentioned in the clause itself.

In general, the force majeure clause can be invoked and legally enforceable if the events that prompted its invocation are:

• Listed among the types of events included in the contract’s force majeure clause
• Beyond the invoking party’s ability to reasonably foresee or prevent
• Directly responsible for making the fulfillment of contract obligations impractical or impossible

Usually, if a force majeure clause fails to come into effect, it is because the court decided that the events in question did not impact the party’s ability to fulfill their contract obligations enough to excuse their failure to perform.

For example, in the 2009 court case Sorbo v. Universal City Studios, the actor Kevin Sorbo attempted to sue Universal City Studios for breach of contract and fraud by arguing that health issues made it impractical for him to continue acting and thus triggered his contract’s force majeure clause.

Sorbo’s appeal to force majeure was unsuccessful, however, because Universal City Studios was able to prove that during the time period for which Sorbo alleged it was impractical for him to continue acting, he had, in fact, continued to act elsewhere. The court ruled that, because Universal City Studios had shown that the unforeseen circumstances Sorbo alluded to in his argument clearly did not make it impossible for him to fulfill his contract obligations, the force majeure clause was inapplicable.

How and when should I include a force majeure clause in my contract?

It makes sense to include a force majeure clause in a contract if there are specific types of circumstances that would render fulfillment of contract obligations impractical for either party.

For example, a shipping company contracted to ship a product to Florida within a certain time frame, during hurricane season, might include an extreme weather force majeure clause in their contracts. Then, in the event of a hurricane, it is possible that the company could fail to deliver the product on time because of hurricane-related delays without fear of litigation.

Docusign makes it easy to create templates that include commonly used clauses such as force majeure. Get in touch to get started now.

This content is for general educational purposes only and is not intended, and should not be considered, legal advice. Laws frequently change and this information may not be current or accurate.  Docusign disclaims all warranties of any kind with respect to this material including merchantability, fitness for a particular purpose, or accuracy.  You should consult with a licensed attorney in your area for legal advice.