Force Majeure Clause: What Counts and How to Draft One

A supplier calls to say they cannot deliver, and invokes force majeure. The question lands immediately: can they?

In common law the answer depends almost entirely on what the contract says. There is no general statutory force majeure doctrine to fall back on. Frustration exists, but it is narrow, it discharges the whole contract rather than suspending it, and courts apply it sparingly.

Civil law systems took the opposite route and wrote the test into their codes. Those codes are worth reading even if your contract is governed by English or US law, because the three-part test they codify is the same test most commercial clauses now use.

This guide covers that test, what never qualifies, how force majeure differs from hardship, and the five parts of a clause that survives contact with an actual event.

The clearest statement of the test sits in the French Civil Code, and commercial drafting worldwide has converged on it.

Article 1218 of the French Civil Code defines force majeure as an event beyond the debtor's control, which could not reasonably have been foreseen when the contract was concluded, and whose effects cannot be avoided by appropriate measures, preventing performance of the obligation.

Three conditions, all required:

1. 1.
   Beyond the party's control. Not merely unexpected, but outside their sphere.
2. 2.
   Not reasonably foreseeable at signature. The reference point is the date of the contract, not the date of the event.
3. 3.
   Effects unavoidable by appropriate measures. A party with a reasonable workaround who did not use it fails this limb.

Other codes reach the same place by different wording. Article 1105 of the Spanish Civil Code excuses events that could not have been foreseen, or which, though foreseen, were unavoidable. Article 393 of the Brazilian Civil Code speaks of a necessary fact whose effects could not be avoided or prevented, and adds a warning worth borrowing: the protection falls away where the party has expressly assumed the risk.

German law has no general provision at all. It works through impossibility under § 275 BGB and change of circumstances under § 313 BGB, both narrow, which is precisely why German contracts spell the clause out.

The costliest confusion is between an event that prevents performance and one that makes it ruinous.

Force majeure addresses prevention. Hardship addresses cost. They have different triggers and different remedies, and a clause that blurs them helps nobody.

French law separates them explicitly: article 1195 of the Civil Code handles hardship, allows a party to request renegotiation, and requires them to keep performing while it happens. Brazilian law does the same through the excessive-onerousness provisions of articles 478 and following. Common law offers no general hardship doctrine, which is why long-term supply contracts import price-adjustment or material-adverse-change clauses instead.

The practical rule is short. If you can still perform but it hurts, you are in hardship territory, not force majeure. Drafting a single clause to cover both, without saying which remedy applies to which situation, produces a clause that produces litigation.

The refusals are more instructive than the textbook examples.

• Price increases and currency movements. Economic risk sits where the contract put it. Costlier is not prevented.
• Lack of funds. Inability to pay does not excuse payment.
• A sub-supplier's failure, unless expressly covered. Whoever promised supply took the sourcing risk.
• A strike among your own workforce, as opposed to a general external stoppage.
• Announced regulatory measures with enough lead time to plan around.
• An event already under way at signature. The foreseeability limb fails by construction.

If the event has already caused a default, what a breach of contract actually requires is the next question. The classic qualifying events are natural disaster, war, embargo and sudden governmental prohibition. But no category decides on its own. The three conditions decide, applied to the facts.

Every one of these gets attacked when the event arrives.

1. 1.
   Definition with a non-exhaustive list. Start from a contract template rather than a clause copied from an unrelated deal. Give examples and close with a sweep-up. An exhaustive list works against whoever drafted it.
2. 2.
   Effect. Suspension of the affected obligation, not automatic termination. Say expressly what happens to the counter-performance during suspension, because silence here produces the worst arguments.
3. 3.
   Notice and deadline. The party invoking must notify promptly, describing the event, the obligations affected and the expected duration. Late notice is the single most common reason a well-founded claim fails.
4. 4.
   Duty to mitigate. The affected party must take reasonable steps and report on them.
5. 5.
   Termination right after a period. If the impediment runs past sixty or ninety days, either side should be able to walk. Without this, the contract hangs indefinitely.

One drafting note on notice. The medium matters less than provable timing and receipt. An electronically signed notice settles both, and under article 25 of the eIDAS Regulation a qualified electronic signature has the same legal effect as a handwritten one.