Joe Dirik is a graduate civil engineer and attorney. He is a member of the construction law practice group at the Dallas office of Jenkens & Gilchrist, PC. |
Force majeure is French for "a higher or superior force," and an exception to the rule that fancy legal terms must be Latin! The Amarillo Court of Appeals' 1998 decision in Sun Operating Ltd. Partnership v. Holt provides an excellent definition of the force majeure clause:
The theory of force majeure has been existent for many years. Often likened to impossibility, historically it embodied the notion that parties could be relieved of performing contractual duties when prevented by causes beyond their control. Force majeure is now little more than a descriptive phrase without much inherent substance. Indeed, its scope and application, for the most part, are utterly dependent on the terms of the contract in which it appears "when the parties have themselves defined the contours of force majeure in their agreement, those contours dictate the application, effect and scope of force majeure. More importantly, [the courts] are not at liberty to rewrite the contract or interrupt it in a manner which the parties never intended."
The key question, therefore, is how, if at all, does the contract define force majeure© The best practice is to provide acceptable instances of events of force majeure in the force majeure clause. Examples are broad and include everything from war; threat of war; and riot to breakdowns or failures of delivery of supplies, materials, labor, or equipment.
What happens if the contract simply says "contractor is not responsible for events of force majeure,"© Don't let this happen. If it did, a court would attempt to determine the parties' intent from the contract, if possible. If the court cannot, it will look to the plain meaning of the contract language or perhaps allow the parties to introduce extrinsic evidence.
The parties can also agree to terminate the contract for convenience if the force majeure event restricts performance for an extended period of time. If possible, always attempt to negotiate the scope and definition of your contract's force majeure provision.
In many cases, a force majeure clause will not relieve a contractor of its obligation to perform, unless the disabling event was unforeseeable at the time the parties made the contract. A government regulation, for example, may explain a project delay. But if the regulation was foreseeable when the contract was formed, it may not excuse delayed performance.
How must a contractor respond when it encounters a force majeure event© Texas law does not recognize an implied duty of diligence in a force majeure clause when faced with a force majeure event.
In the Sun Operating case, supply from a gas pipeline was interrupted because the pipeline owner was performing repairs. The Holts, lessors of mineral properties serviced by the pipeline, sued the lessee to terminate the lease because production stopped. The lessee argued its nonperformance was excused by the very broad force majeure clause in the lease. In response, the Holts argued that the lessee had a duty to exercise due diligence to remove the force majeure condition, namely the interruption of the gas pipeline by the pipeline company owners. The court found that the lease agreement was silent as to a duty to use diligence to overcome the force majeure event and stated, "...given this, we choose not to rewrite the contract to impose such a duty." By its terms a contract can expressly require the parties to exercise reasonable diligence to avoid or overcome a force majeure event.
Force majeure should not be confused with "impossibility or impracticability of performance," generally, a common law theory that relieves a party from performing under a contract when it is physically impossible to perform. Texas common law severely limits, however, the application of impossibility or impracticability as a defense to performance under service contracts. A force majeure contract clause will usually trump the common law impossibility of performance theory where they conflict.
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