What is a Force Majeure Clause?
The COVID-19 crisis means that Force Majeure clauses are getting brought up a lot these days. It seemed an ideal time to discuss what these clauses are.
Force Majeure is a French phrase meaning “superior force.” It’s a contract provision designed to relieve both parties of their obligations in the face of large, unforeseeable events. Earthquakes. Wildfires. Hurricanes. Pandemics.
The idea is that some of these events can make performing those duties impossible, dangerous, or both.
Many real estate contracts include construction or maintenance duties which could be subject to Force Majeure clauses, so long as they were included in the original contract. Loan documents may have these clauses as well. If you are unable to meet your contractual obligations right now it’s more important than ever to have a (virtual) meeting with your lawyer to determine if the Force Majeure clause has you covered.
Finding the clause isn’t enough. Usually you will have to provide written notice that you are unable to meet your obligations. Even if your contract doesn’t specifically spell this out it’s a good idea. It will remind that party that the Force Majeure clause exists and will reassure them that you’re not just ignoring the contract between you. Your attorney should guide you on the specific language to be used in this notice.
For some parties the problem will be the narrow range of listed events under which Force Majeure will apply. As noted by The National Law Review, the clauses will be “narrowly construed.” Your clause would need to include language specific to pandemics or epidemics, plagues, emergencies, or outbreaks.
Clauses referencing “acts of government” may also apply, given shelter in place orders. So might “catch-all” language. Parties may agree as to whether this language applies, though it might be wise to have any such agreement in writing.
An “impossibility” defense may also apply if Force Majeure doesn’t, though this defense is a difficult one to pull off. Certainly an act would be impossible if it is currently illegal, the way construction work currently is in New York, having been deemed non-essential.
If you aren’t covered by a Force Majeure clause it’s important to determine whether performing your duties is really impossible, or if it’s just difficult. If it is merely difficult you won’t generally be covered. Again, consult with your attorney before making any major decisions.