What is Force Majeure and how it affects your contracts
– By Angelica Vigliotta
A force majeure is an act of God or man that is unforeseen and unforeseeable and out of the reasonable control of one or both of the parties to a contract, and which makes it objectively impossible for one or both of the parties to perform their obligations under the contract. Examples of these occurrences that are unforeseen and unforeseeable that may trigger a force majeure are earthquakes, riots, war, tsunamis and even the current pandemic (Covid- 19).
Force majeure applies to all types of contracts, including employment contracts. Some contracts contain a force majeure clause, however, if a contract does not contain a force majeure clause, or if a force majeure clause in a contract does not name the unforeseen event that the parties wish to rely on, then the parties may be able to rely on the common law principle of ‘supervening impossibility of performance’ to suspend their obligations under the contract, provided that it has become objectively impossible for them to perform under the contract as a result of an unforeseeable and unavoidable event. Once the force majeure event has come to an end and performance has become possible again, the contract could continue, if not definitively cancelled or renegotiated once again based on the changed playing fields.
The general effect of a force majeure is that it extinguishes the obligations owed between parties. No action for damages for a breach of contract is available to a party to a contract where the other party is unable to perform resulting from force majeure, but an “innocent” party may have a claim for unjustified enrichment if such party continued to perform in the case of reciprocal obligations.
Should you require assistance please feel free to contact Angelica on 0860 764 078 or email Angelica at email@example.com.