‘Force majeure’ can mean just about anything, which is a problem if you want to invoke it in a contract dispute. So, how is this Napoleonic throwback best used?
When a project gets into difficulties, both parties usually look at the terms of the contract to see what clauses might help them, and whether there is anything to cover the particular problem they have encountered.
One of the more obscure terms they might find is a reference to “force majeure”. As the words suggest, this is not an English concept; it originates in the French Napoleonic code and it is not particularly clear what it means in the context of English law. As one judge remarked, the meaning of the term has “evaded lawyers for years”. However, these words are often found in English contracts. In the JCT contracts, for instance, force majeure is listed as a “relevant event”. It tends not to be much used by the parties to the contract, however, since there are usually many other relevant events that cover the particular circumstances that have arisen.
So what happens if the grounds for an extension of time and an increase in payment in your contract do not cover the situation, or you have a contract that just mentions force majeure without explaining it?
The meaning of force majeure has not often been considered by the courts in the context of a construction contract, but there is an old case, Matsoukis vs Priestman, that concerned the construction of a steamer. The contract was slightly unusual: it provided for liquidated damages except “the cause of force majeure” and certain types of strikes.
The construction of the steamer was in fact delayed by events including bad weather, the absenteeism of workers because of a football match and the funeral of the shipyard manager. The judge was very dismissive of these and said that they were the “usual incidents interrupting work” so did not constitute force majeure. So, let’s leave aside the intriguing question of which football match in 1912 caused such a high level of absenteeism. The courts did accept that breakdown of machinery fell within the definition of force majeure, as did dislocation of business (waiting for another ship to complete and move out of the berth so that the steamer could be constructed there).
‘Usual force majeure clauses apply’ is too vague to be enforceable
The judge thus rejected the wider Continental concept of force majeure, meaning anything outside the control of the contractor, but also refused to restrict the concept only to acts of God. His judgment was helpful in giving a wide interpretation to the term. But more recent cases have tended to restrict its application, by suggesting that the events which constitute force majeure should be set out in the clause itself and that “usual force majeure clauses apply” is too vague to be enforceable.
The term “force majeure” can therefore be helpful in some circumstances, but it is important to remember that if the contract itself either defines force majeure or states what is to happen if an event of force majeure occurs, the terms of the contract will apply. For instance, in a PFI contract where SoPC4 wording is used, force majeure is defined to mean certain specified events (for example war, terrorism and chemical contamination) which are unlikely to happen and which are particularly difficult to manage.
Some contracts for more substantial projects will then go on to specify what must happen if there is an event of force majeure. Typically, the contractor is given relief from liquidated damages and there is an option for either party to terminate the contract after a suitably lengthy period of time, say six months, if it has not been possible to carry out any work during that period because of the force majeure event.
So force majeure will mean whatever the definition says in the contract, and any provisions in the contract as to what happens in the event of force majeure will apply also. If the term is just used on its own, as in a JCT contract, there can be wide-ranging interpretations. Unless the contract states otherwise, the party alleging that force majeure has occurred must prove it, on the balance of probabilities. That party must also mitigate its loss, so if there is another way of achieving whatever has been affected by the adverse event, it will not be treated as force majeure.
It will be interesting to see whether the current financial climate leads to greater use of force majeure clauses and whether the courts will take the opportunity to give us a modern interpretation of the term.
Gillian Birkby is head of construction at Fladgate