The concept of force majeure, although recognised by other European civil legal systems, is broadly alien to the English Common Law. It is a concept which only derives its lifeblood from being present in a contract and as such needs to be carefully and – as best possible – clearly defined.
2. Force Majeure : Its purpose
The purpose of such a provision is to exclude a party’s obligation to perform a contract owing to events which are beyond that party’s control and could not have been foreseen at the time that the contact was made.
Many agreements purporting to provide for an event of force majeure seek exhaustively to list those events which are likely to fall within the definition. These may comprise war, natural disasters, civil unrest, hurricanes or pandemics. [If the event has not been expressly listed a Court may be willing to examine the categories of event in order to decide whether or not it might fall within the concept of force majeure.]
It is best to be as specific as one can. The more general or amorphous the range of events, the more difficult it may be to establish that the specific occurrence comprises an event beyond control.
If the parties between them agree (or it is found) that an event of force majeure has arisen, then broadly put, the parties are excused from performance unless it can be shown that there exist alternative means to implement and conclude the agreement.
5. Essential Criteria
Accordingly, in order successfully to maintain a claim to be excused from performance on the basis of force majeure it is essential to establish compliance with the following three criteria:
(1) The event defined as force majeure within the agreement has arisen;
(2) It is not possible to conclude the contract by any other means; and
(3) There was nothing that could reasonably have been done to avoid the event or to lessen its consequences.
All cases must necessarily be fact-specific. However, in general terms, it may properly be said that if an agreement purports to excuse performance upon the basis of a pandemic, then prima facie the agreement would appear to include the current virus.
5. Recognition and agreement
If it is thought that there may be a case or claim to terminate performance upon the basis of an event of force majeure occasioned by the current pandemic, close attention must be paid to the wording of the agreement. The opposing party must be invited to agree that the event falls within force majeure – and in keeping with the contractual provisions – the consequences thereof will then apply. Ordinarily this means the contract may be terminated with neither party having any further or other liability to the other.
Care must be taken when seeking to terminate by ensuring that this is done fully in keeping with the contractual provisions.
7. Insurance policies
If one’s business has been the subject to force majeure and there has been expense and outlay which may be irrecoverable, it may be wise to examine whether one might properly have regard to the provisions of insurance policies taken out to cover this eventuality. Certain will refer to loss or interruption of business occasioned by a notifiable disease. In the United Kingdom Covid-19 was declared a notifiable disease on 5th March 2020. Again, careful attention must be paid to any such policy as to whether it might extend retrospectively to the occurrence of Covid-19.
8. General disclaimer
The observations expressed in this Article are intended as a broad and pragmatic guide to essential principles and practice. However, all cases or claims may necessarily turn upon their own facts and the wording of the agreement in question.
This Article contains views founded upon the interpretation of current legal practice and procedure. However, each case is fact-specific and much may turn upon the individual nature of the case or changes in the law or differing judicial interpretations.