Force Majeure is a clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, prevents one or both parties from fulfilling their obligations under the contract. Force majeure is referred to as ‘vis major’ in Latin; and ‘cas fortuit‘ in French.

Force majeure is generally intended to excuse the affected party from performing the contract in whole or in part; excusing that party from delay in performance; entitling them to suspend or claim an extension of time for performance; or giving that party the right to terminate. This depends on the drafting style of the clause. In practice, force majeure do not excuse a party’s non-performance entirely, but only suspend or extend the party’s performance obligations for the duration of the force majeure.

Force majeure clauses in contracts usually adopt different ways to defining the type of event which may, depending on its impact, relieve a party from contractual obligations. The approach depends on the agreement of the parties to the contract. The parties may adopt ‘listing of specific events approach’ or ‘broad approach’, or combination of ‘listing of specific events and broad approach’.

1. Listing Specific Events Approach: It happens where the parties state the occurrences or extraordinary events or circumstances in the contract that would render performance of the contract materially impossible to fulfill. These may include events such as war, terrorism, earthquakes, hurricane, acts of government, plagues, flood, volcanic eruption etc. Where the term ‘pandemic’ has been used, that will clearly cover Covid-19.

The act of Government will occur if it was made in form of ‘Order’ instead of ‘recommendation’. Where the Government has imposed travel restrictions, quarantines or trade embargoes, the affected party in a contract can invoke doctrine of Force majeure provided that it was specifically listed in the contract clause.

Where the parties have expressly listed events in the contract capable of invoking force majeure, it would be difficult to argue that parties who specifically listed events but did not include a particular event like pandemic, nonetheless, intended that such event will apply. Therefore, where there is no provision for pandemic event in the contract, a party cannot invoke doctrine of force majeure. Where the parties include ‘act of the government’ in the contract clause but fails to include ‘Pandemic, the covid-19 will avail such party provided that the defaulting party proves to the court that the quarantine order by the government prevented him from performing his obligation. However, it depends on the nature of the contract. For instance an obligation that requires the party to move from one place to another during quarantine.

2. Setting Broad Events Approach: It occurs where parties, instead of listing the events, refers the events as “beyond the parties’ reasonable control which is capable of preventing the parties from fulfilling their obligations under the contract”. In determining whether Covid-19 falls conveniently under this category depends on the advocacy skill of the Counsel representing the defaulting party when persuading the Court to agree that Covid -19 pandemic made it difficult for the defaulting party to perform his contractual obligations or completing same on time.

3. A Combination of No. 2 and 3 above: It occurs where clauses may give a list of events and thereafter includes a general wording such as “or any other causes beyond the parties control”.
In determining whether covid-19 is an “event beyond the parties control” may depend on the events specifically listed. Therefore, the interpretation of the general wording may depend on the interpretation emanating from the particular events mentioned rather than mere similarities to those events specifically mentioned.

WHAT A PARTY MUST SHOW TO TRIGGER DOCTRINE OF FORCE MAJEURE IN THE WAKE OF COVID-19 PANDEMIC

Even if the Covid-19 pandemic or act of government is a type of event covered by the force majeure clause, the two vital questions to consider are how the defaulting party can trigger the doctrine and the impact on the defaulting party’s ability to perform his contractual obligations.

A party seeking to rely on a force majeure must show that;

a. The force majeure was the cause of his inability to perform or delayed performance;

b. the non-performance was due to circumstances beyond his control; and

3. there was no reasonable steps that he could have taken to avoid or mitigate the event or its consequences.

Note: the probable obligation of proving force majeure depends on the word used in describing the level of impacts on the contractual obligations of the defaulting party. The clause may use the word “prevented or hindered or materially impossible or delayed.

-Prevented means physically and legally impossible. It also means materially impossible.

-Hindered means interfered with. This is lesser to prove than “prevented“

– Delayed means that you are not required to prove that it’s not impossible to perform but it is difficult to comply as quickly as required.

A party seeking to rely on a force majeure clause must comply with any procedural requirements under the contract, such as a requirement to give notice of its intention to rely on the clause to the other party within a particular time, including any formalities required for the service of notices.
Where the defaulting party fails to comply with the procedural requirements as provided in the contract, he cannot successfully rely on the doctrine of force majeure.

Miracle Akusobi, Esq.
(Senior Associate @ The Law Union)
miracleakusobi@gmail.com