0311 force majeure clauses construction contracts
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FORCEMAJEURECLAUSESINCONSTRUCTIONCONTRACTSBYLOWELLA.WESTERSUND,Q.C.,PARTNERFRASERMILNERCASGRAINLLPCALGARY,ALBERTA
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TableofContents
I. PurposeofForceMajeureClauses ......................................................................................... 2II. PresentForceMajeureClauseUsage ..................................................................................... 5III. RequirementsforForceMajeure.......................................................................................... 11IV. TriggeringEvents .................................................................................................................. 11V. Duration/Mitigation.............................................................................................................. 11VI. Notice.................................................................................................................................... 14VII. EffectonContractualObligations......................................................................................... 15VIII. Conclusion............................................................................................................................. 16
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FORCEMAJEURECLAUSESIN
CONSTRUCTIONCONTRACTS
Theprimarypurposesofconstructioncontractsaretoclarifyresponsibilities(including
performanceandpaymentobligations)andtoallocaterisk. Itisinregardtothelatterpurpose
thattheconceptofforcemajeureplaysanimportantrole. Suchclausesservetodealwiththe
riskofeventswhichfallshortoffrustration. Suchclausescanbesuccessfullyemployedto
recognizeindustryorprojectspecificrisks. Bywayofexample,anumberofyearsagothewriter
dealtwithapipelineclaimthatarosefromthedelayedcompletionofaseriesofcompressor
stationsandaconnectingpipelinethroughthesoutherninteriorofBritishColumbia. Perhaps
thebiggestriskonthat,andperhapsonanypipelineproject,wastheinabilitytoreasonably
manoeuvreandworkonthepipelinerightaway. Asmatterstranspired,theworkwasdone
during
an
extremely
rainy
summer.
Although
very
unusual,
the
amount
of
rain
did
not
approach
oneinonehundredyearorotherbunchnumbersthatwouldhaveclearlyhaveresultedina
forcemajeureeventhavingbeentriggered. Nevertheless,theworkbecameveryslowandvery
expensivetocomplete. Onlyafterextensivenegotiationandlitigationpreparationwerethe
potentialclaimsarisingfromthecostandtimeofperformanceresolved. Hadtheforcemajeure
clauseinthecontractbeendraftedwiththespecificprojectandtypeofworkriskinmind,the
disputecouldhavereadilybeenavoided.
Atthetimeofwriting,thereareseriousshortagesofbothlabourandcertainmaterialsin
Canada,thoughtheshortagesaremoreacuteinsomeareasofthecountrythanothers.
OilsandsprojectconstructioninAlberta,preOlympicconstructioninBritishColumbiaand
generaleconomicexpansioninSaskatchewanhaveallleadtoshortagesinWesternCanada. On
otherhand,
the
competition
for
steel,
specialty
metals
and
specialty
pressure
vessels
throughoutNorthAmerica,arguablycausedinpartbycompetitionfromtherapidlyexpanding
economiesofbothChinaandIndia,hasfocusedtheneedforthecarefulexaminationand
draftingofbothforcemajeureandotherriskallocationclauseswithinconstructioncontracts.
TheissueishighlightedinAlbertawherethereisafearthatlabourshortagecouldbeadvanced
asaforcemajeureevent. Thesecircumstanceshavesparkedsomeownersoflargeprojectsto
specificallyexcludelabourshortageasaneventofforcemajeure. This,apparently,despitesuch
shortageneitherfallingwithintheideaofthe"...unexpected,somethingbeyondreasonable
___________________________
LowellA.Westersund,Q.C.,Partner,FraserMilnerCasgrainLLP,Calgary,Alberta
Theauthorwishestoacknowledgethecontributions,insights,andresearchassistanceof
lawyersandstudentsatFraserMilnerCasgrainLLPwhocontributedtothepreparationofthis
article,TomO'Leary,CoryGhitter,andChrisKnight,StudentAtLaw.
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foresightorskill1anddespitethefactthatmanycasesinallthreeofCanada,Englandandthe
UnitedStateshaveheldthechangesinmarketconditionsarenotsufficienttofallwithina
standard
force
majeure
clause.
2
Inotherareas,ratherthanfaceargumentsthataforcemajeureeventhasoccurredduetothe
materialshortage,riskallocationclauseshavebeenformulatedtospecificallyaddressshortages
ofsuchmaterialsassteel. Forexample,aprovisionwrittenonbehalfoftheAmericanInstitute
ofSteelConstructionprovidesasfollows:
The subcontract price is based upon the agreed prices and surcharges for the steel types and
shapesnecessaryfortheprojectandpostedandmadepubliclyavailableby[steelmill]on[date].
Notwithstandinganythingherein to thecontrary,any increasesordecreases in thepriceof the
steelorderedbysubcontractorfortheproject,oranyadditionalsurchargesimposedonthesteel
ordered by subcontractor for the project, after [date] shall result in a corresponding
dollarfordollarincrease(ordecrease)inthesubcontractprice.3
Itis
the
intention
of
this
article
to
highlight
elements
that
require
careful
and
specific
considerationofthedraftingofforcemajeureclauses.
I. PurposeofForceMajeureClausesForcemajeureclausesexisttoexcludeliabilitywhereunforeseeneventsbeyondaparty's
controlpreventtheperformanceofitscontractualobligations. TheSupremeCourtofCanadain
AtlanticPaperStockLtd.v.St.AnneNackwawicPulp&PaperCo.,4theleadingCanadianforce
majeuredecision,describethepurposeofforcemajeureclausesasfollows:
[Aforcemajeureclause]generallyoperatestodischargeacontractingpartywhenasupervening,
sometimes supernatural, event, beyond the control of either party, makes performance
impossible. Thecommonthreadisthatoftheunexpected,somethingbeyondreasonablehuman
foresightand
skill.5
Theterm"forcemajeure"hasbeenvariouslydescribedelsewhereasmeaningan"irresistible
force",an"unforeseenevent",an"overpoweringforce",or"afactoraccidentwhichhuman
prudencecanneitherforeseenorprevent."6Putanotherway,forcemajeureeventsare
generallyconsideredtobeevents"beyondthecontrolandwithoutthefaultornegligence"of
thepartyexcused.7
1AtlanticPaperStockLtd.v.St.AnneNackwawicPulp&PaperCo.,(1975),56D.L.R.(3d)409(S.C.C.)[AtlanticPaper].
2AtlanticPaper,ibid.;Tennants(Lancashire)Limitedv.C.S.Wilson&CompanyLimited[1917]A.C.495(H.L.);Brauer&Co.Ltd.v.JamesClark
(RushMaterials),Ltd.,[1952]2AllE.R.497(C.A.);Re:TomJones&SonsLtd.v.TheQueeninRightofOntario(1981),119D.L.R.
(3d)684(Ont.H.C.);NorthernIndianaPublicServiceCompanyv.CarnonCountyCoalCompany,799F.2d265(1986);
LanghamHillPetroleum,Inc.v.SouthernFuelsCo.813F.2d1327Cert.denied,108S.Ct.99(1987);Blythe&Co.v.Richards
Turpin&Co.(1916),85 .JK.B.1425.
3AscitedinLyman,infranote14at35.
4AtlanticPaper,supranote1.
5Ibid.at411.
6JohnS.Kirkham,"ForceMajeure DoesItReallyWork?"(1984)30RockyMountainMineralLawInst.6at3.
7UnitedStatesv.BrooksCallawayCo.,318U.S.120at1234(1943).
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Whilethe"irresistible"forcescontemplatedbyforcemajeureclausestypicallyincludesuch
thingsaswars,naturaldisasters(andother"actsofGod")theycanalsoincludemore
conventional
commercial
events
such
as
the
failure
of
supplies,
forms
of
labour
unrest
and
equipmentfailure.
Theterm"forcemajeure"isderivedfromcivilianlawandencompassesaconceptnow
entrenchedinseverallegaltraditions,includingthelexmercatoria.8 Itspresencein
AngloAmericancontractlawcanbedirectlytracedtoFrenchCodeCivil.9 Forcemajeureis
basedontheconceptthatitisfairtoallowapartytoescapecontractualobligationswithout
faultwhensatisfactionofthoseobligationsismadeimpossible. Ratherthanbeingauniversally
applicableconceptasinFrenchjurisprudence,however,"forcemajeure"intheAngloAmerican
traditionisapurelycontractualrighttothesuspensionorreleaseofone'scontractual
obligationsuponthehappeningofcertaindefinedevents.
Though
related
to
the
common
law
doctrine
of
contractual
frustration,
force
majeure
can
be
appliedmuchmorebroadlyandflexibly. Thelate19thcenturyQueen'sBenchdecisioninJacobs
v.CreditLyonnaise10
illustratesthispoint. There,thedefendantshippersclaimedforcemajeure
afteritfailedtodeliverespartoshipmentsowingtoawarthathadbrokenoutinAlgeria. Under
Frenchlaw,theninforceinAlgeria,thedefendantwouldnothavebeensubjecttoclaimsof
damages"when,bymeansofasuperiorforce(forcemajeure)oranaccident,theobligorhas
beenpreventedfromgivingordoingthatwhichhewasboundtogiveordo."11 TheEnglish
CourtfoundthatwhileFrenchlawmayhavegivenrelief,Englishlawappliedandtherewasno
equivalentcommonlawprinciple(includingfrustration)thatcouldgroundrelief. Whilethe
interveningwarhaddisruptedperformance,itdidnotdestroythe"entiresubjectmatter"ofthe
contractortheunderlyingrationalforthebargainaswasrequiredforreliefunderthedoctrine
offrustration.
The
contract
did
not
provide
force
majeure,
and
the
defendant
shippers
were
heldliable.
AboutthesametimeandlikelyinrecognitionoftheharshnessoftheresultinJacobs,explicit
forcemajeureprovisionsbegantoappearregularlyinEnglishcontracts.12 Theemergenceof
contractualforcemajeureprovisionsarose,atleastinpart,asameanstoproviderelieffrom
contractualobligationswhereperformanceisrenderedimpossibleorunfeasible,butwherethe
stricttechnicalrequirementsforadefenceoffrustrationarenotmet.
8C.f.,PrinciplesofInternationalCommercialContracts,UNIDROIT,1994,Art.7.1.7.
9C.f.,Arts.1148,1348,1631,1730,1733,1754,1755,1784,1929,1934and1954C.civ.
10(1884)12Q.B.D.589(C.A.)[Jacobs].
11Art.1148C.civ.ascitedintheheadnoteof[18811885]AllERRep151,analternatereportofJacobs,ibid.
12Inthissense,thereliefgainedthroughAngloAmericanforcemajeureclausesisbestconsideredasonlyindirectlyrelatingtoforcemajeure
relieffoundinciviliancodes.ThishasimplicationsforCanadianlawyers whiletheQubecCodecontainsnumerousreferences
toforcemajeure,theconceptsthereinareonlyindirectlyrelatedtocontractualforcemajeureclauses.See,c.f.SirGuenter
Treitel,FrustrationandForcemajeure2ded.(London:Sweet&Maxwell,2004)at12021.
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Whiletheuseofsuchclausesisnowoflongstandingusageincommonlawjurisdictions,the
foreignnatureoftheseclausesmay,inpart,explainthedifficultycommonlawcourtshavehad
in
dealing
with
such
clauses
as
is
stated
in
a
1999
article:
Theforcemajeureclause isantitheticaltocommon lawprinciples. Underforcemajeureclauses
parties avoid contractual obligations and fault or liability as ascribed to neither party to the
contract, but rather to a cause beyond the control of either of the parties. Given the great
divergencebetweencommon lawvaluesandforcemajeureclauses, it isnotsurprisingthatour
courtshaverepeatedlyshowngreatreticenceingivingeffecttotheseclauses.13
IntheU.S.,referenceisnotmadetoforcemajeureatall,butrather"toimpracticability"as
arisingfromthedoctrineofimpossibilityofperformance. TheUS.approachwasdescribedby
WilliamLymanasfollows:
Therule,asoftenquoted,isthatabsentacontractprovisiontothecontrary,"[w]hereoneagrees
todo,forafixedsum,athingpossibletobeperformed,hewillnotbeexcusedorbecomeentitled
toadditionalcompensation,becauseunforeseendifficultiesareencountered. (Dugan&Meyers
ConstructionCo.,Inc.v.StateofOhio,162OhioApp.3d491at503).14
Thedoctrine[ofimpossibilityofperformance]isinventedbythecourtinordertosupplementthe
defects of the actual contract. The parties did not anticipate fully and completely, if at all, or
provide for what actually happened. Some factors determining the applicability of an
impracticability defense include: foreseeability of the contingency, whether the means of
performance willbe entirely different than that agreed to, whether the riskof thecontingency
was allocated to a party, and whether the cost of performance will be vastly increased. It is
essentially an equitable defense to the general rule that an obligor must bear the risk that the
performanceofacontractmaybecomemoreburdensomeorlessdesirable. Or,saidanotherway
in the same decision, the elements for impossibility of performance were the unexpected
occurrenceofaninterveningact,suchoccurrencewasofsuchacharacterthatitsnonoccurrence
wasabasicassumptionoftheagreementoftheparties,andthatoccurrencemadeperformance
impracticable.15
Impossibility means not only strict impossibility but impracticability because of extreme and
unreasonabledifficulty,expense,injuryorlossinvolved. Restatement(First)ofContracts,454.16
[and] ...a thing is impossible in legal contemplation when it is not practicable; and a thing is
impracticablewhen itcanonlybedoneatanexcessiveandunreasonablecost. Royv.Stephen
PontiacCadillac,Inc."17
Underthedoctrineofimpossibility,acontractor'sperformancemaybeexcusedwhenacondition
thatispartofthecontractbecomesimpossibletoperform.18
[C]ontract performance is rendered impossible only when it is objectively determined that no
contractorcouldperformthework.19
13JoniR.PaulusandDerkJ.Meeuwig,"ForceMajeure BeyondBoilerplate"(1999)37Alta.L.Rev.30236.
14WilliamD.Lyman,"ToPayorNottoPay ToStayorNottoStay:ContractorsandSubcontractorsRighttoReceivePaymentforWorkperformed
andtheContractualandLegalObstaclestoReceivingIt"(PaperpresentedtotheAmericanBarAssociationForumonthe
ConstructionIndustry,1213October,2006)[unpublished][Lyman].
15Ibid.
16Ibid.
17Ibid,citing15Conn.App.101,543A.2d775(1988).
18ConnorBrothersConstructionCompanyv.U.S.,65Fed..C1.657at686(Fed..C1.2005).
19Ibid.
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A contract is commercially impracticable when performance would cause 'extreme and
unreasonabledifficulty,expense, injury,or losstooneoftheparties."20
or"when 'allmeansof
performancearecommerciallysenseless.21
Intheresult,whiledifferentwordsareemployedindifferentcommonlawjurisdictions,the
natureoftheconsiderationofforcemajeureremainsthesame.
II. PresentForceMajeureClauseUsageThoughthetraditionalrationaleforforcemajeureclausesinvolved"unanticipatedevents"and
"impossibility"ofperformance,morerecentpracticehasbeentouseforcemajeureprovisions
asabroaderriskallocationtool. Forcemajeureclausesmaybeusedtoanticipatethoserisks
thatareuninsurable,orthatrenderperformancemerelyinconvenientoruneconomicalas
opposedtoimpossibleInshort,theclausesdealwithrisksdeemedunacceptablebytheparties.
Forexample,problemsassociatedwithlabourdisruptionsareoftenaddressedthroughforce
majeureprovisions,
even
though
they
may
fall
outside
the
traditional
rationale
of
such
clauses.
Inthissense,aforcemajeureclauseactsasariskallocationtoolincircumstancesbeyondthe
traditional"unforeseeableimpossibilityofperformance"rationale. Contractingpartiesarenot
necessarilyconfinedtoeventswhichmakeperformanceimpossible.22
Thepracticalutilityofforcemajeureclausesbecomesclearwhencontrastedwiththecommon
lawdoctrineofcontractualfrustration. Forcemajeureclausesandthedoctrineoffrustration
aresimilarinthattheydealwithoccurrencesbeyondthecontrolofpartiestoanagreement.23
Frustrationrequiresthattheentiresubjectmatterorunderlyingrationaleforthecontractbe
destroyed. Itnormallyoperatestopermanentlyrelievepartiesfromalloftheircontractual
obligations,includingthosetoperformandtopay,andessentiallyleavesthepiecesofa
contracttofallwheretheymay. ForceMajeureclauses,ontheotherhand,permitamuch
greaterdegreeofflexibility. Theoccurrencesgivingrisetoreliefcanbedefinedwithgreater
certaintyandtheentirerationaleorsubjectmatterofthecontractneednotbedestroyedin
orderforforcemajeuretooperate. Forcemajeuremayalsobetemporary,allowingtheparties
tomaintaintheircontractualarrangementsoncetheeventpassesorisremedied. Asaterm
negotiatedbetweenparties,aforcemajeureclausecanrespondtounpreventableoccurrences
whilestillmaintainingcertaincontractualobligations,suchasthoserelatingtopayment,and
temporarilysuspendingcertainothers,suchasthedeliveryofproduct. Forcemajeureclauses
canalsoprescribedifferingconsequencesdependingonthenatureortypeofforcemajeure
event. Whereasthedoctrineoffrustrationisabluntinstrumentthatpermanentlyendsall
contractualobligations,acarefullycraftedforcemajeureclauseiscapableofrespondingtothe
same
events
in
a
more
predictable
and
equitable
manner,
while
maintaining
the
contractual
relationshipbetweentheparties.
20Ibid.,citingRaytheonCo.v.White,305F.3d1354at1367(Fed.Cir.2002)(citingRestatement(Second)ofContracts261cmt.d(1981)).
21Ibid.,citingJennie0Foods,Inc.v.UnitedStates,217,Ct.CI.314,580F.2d400,409(1978).
22SeeArcor,infranote2935,Tejas,infranote45at7.
23G.H.L.Fridman,TheLawofContractInCanada(Toronto:Carswell,1999)at591.
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Thebreadthofpartiesdiscretionindraftingforcemajeureclausescanbecircumscribed,
however. AgoodexampleistheSupremeCourtofCanada'suseofthisejusdemgeneris24
principle
to
construe
a
force
majeure
clause
in
Atlantic
Paper.
25
There,
force
majeure
was
claimedbythepurchaserofwastepaperusedintheconstructionofcorrugatedmedium. This
purchasermanufacturerclaimedthatitsinabilitytofindaprofitablemarketforitsfinished
productconstitutedaneventofforcemajeureunderitspurchasecontractwithitswastepaper
supplier. Thepurchasecontractinquestiondefinedforcemajeurebywayofalistofevents
(i.e.actsofGod,war,damageordestructiontoproductionfacilities). Thelistconcludedwith
thephrase"orthenonavailabilityofmarketsforpulporcorrugatingmedium".
Indeterminingwhetherthemarketsituationfacedbythemanufacturerfellwithinthis
concludingphraseofthedefinition,theCourtappliedtheejusdemgenerisprincipletoholdthat
thephraserelieduponmustbeinterpretedsoastolimititsapplicationtoeventslikethose
previouslydescribed,"overwhichthe[partyclaimingsuspensionofthecontract]exercisesno
control,"26and
which
"makes
performance
impossible".27
Since
the
market
for
the
products
of
thepurchasermanufacturerhadbeenfoundtobemateriallyunchangedfromthetimeofthe
executionofthecontract,thepurchaser'sclaimthatthelackofaprofitablemarketforits
finishedproductconstitutedaneventofforcemajeurecouldnotbesustained. Thepurchaser
hadsimplyenteredintoabusinessarrangementwhichatthetimeofcontracting,andatthe
timeoftheallegedforcemajeure,wasunprofitable. There,despitetheforcemajeureprovision,
DicksonJ.(ashewasthen)refusedtoupholdtheforcemajeureprovisiondefinedbythe
"nonavailabilityofmarkets":
IdonotthinkSt.Annecanrelyonaconditionwhichitbroughtuponitself. Afairreadingofthe
evidence leads one to conclude that the whole St. Anne project for the manufacture of
corrugatingmediumwasmisconceived. Theproblemswhichplagueditproceeded,however,not
from
nonavailability
of
markets
for
corrugating
medium
but
from
[a]
lack
of
an
effective
marketingplan ...and inordinate operatingcosts... Theproject,conceived in ephemeralhopes
and not the harsh realities of the market place, resulted in failure for which St. Anne and not
changesinthemarket...mustbeheldaccountable.28
WhereAtlanticPapercircumscribestheeffectofforcemajeureprovisionsthroughtheuseof
principlesofinterpretation,theAlbertaCourtofAppealhasindicatedthatastandardof
"commercialreasonableness"mayalsobeusedtocircumscribesuchprovisions. InAtcorLtd.v.
ContinentalEnergyMarketingLtd.,29theCourtwasfacedwiththequestionofwhetheragas
pipelineoperatordeclaringforcemajeureasaresultofpipelinedamagewasrequiredtoeffect
24"Wheretherearegeneralwordsfollowingparticularandspecificwords,thegeneralwordsmustbeconfinedtothingsofthesamekindas
thosespecified"asperLordCampbell,C.J.inReg.v.Edmunson(1869).28L.J.M.C.213at215ascitedinD.A.Dukelow,
DictionaryofCanadianLaw,2ded.(Toronto:Carswell,1995)at375;seealsoathoroughdiscussionofthisruleandits
applicationinR.Sullivan,ed.,DriedgerontheConstructionofStatutes3ded.(Toronto:Butterworths,1994)at203213.
25AtlanticPaper,supranote1at411.
26Ibid.at41112.
27Ibid.at411.
28Ibidat411.
29(1996),38Alta.L.R.(3d)229(C.A.)[Atcor].
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repairsassoonaspossible,regardlessofcost. Moreover,duringtheperiodinwhichthe
pipelinewasbeingrepaired,theCourtwasaskedtoconsideriftheoperatorisrequiredto
source
alternate
supply
for
a
buyer
in
order
to
mitigate
force
majeure,
is
the
cost
or
inconvenienceofdoingsorelevant? Someagreementsdealwithsuchissuesexplicitly,but
wheretheagreementissilent,animpliedstandardof"commercialreasonableness"washeldto
existbytheAlbertaCourtofAppeal. Whatmayormaynotbe"commerciallyreasonable"inany
givencasewillbeextremelydifficulttopredict. Inthissense,the1996Atcordecisionhas
arguablychangedthefaceofforcemajeureinterpretation,atleastinAlberta.
AtcorwasasupplierofgastoContinentalthroughapipelineownedbyNovaCorporation. The
supplycontractincludedaforcemajeureclausethatAtcorreliedonwhenNova'spipeline
experiencedmechanicalproblemsthatreducedpipelinecapacity. Atcorwasforcedtocurtailits
shipmentsandthuscouldnotmeetallofitssupplyobligations. Ratherthancurtailingthegas
shippedtoallofitscustomersonaproportionatebasis,however,Atcorchosetoselectively
declareforce
majeure
such
that
Continental
received
no
gas
while
other
Atcor
customers
receivedtheirfullsupplies. Continentalwasforcedtopurchasegassuppliesatahigherrateand
arguedthatAtcorcouldnot"cherrypick"customersinaforcemajeuresituation. Rather,Atcor
hadadutytomitigatebyproratingdeliveriestoallcustomersand/orsourcingalternative
supply. Continental'sargumentwasdismissedattrialonthebasisthatthewrittenagreement
didnotmentionanyprorataobligation,noranobligationtoprovidealternativesupply.
Continentalappealed.
TheAlbertaCourtofAppealtookamorenuancedapproachthanthetrialjudge. Itreasoned
thatasageneralproposition,asupplierisnotonlyrequiredtomitigatetheforcemajeureevent
itself,butalsotheeffectontheotherpartyoftheforcemajeureevent. TheCourtfurtherheld
(relyingon
English
authority)
that
these
obligations
to
mitigate
are
not
infinite
but
are
limited
by
"commercialreasonableness":
Asupplierneednotshowthattheevent[ofallegedforcemajeure]madeitimpossibletocarryout
thecontract,butitmustshowthattheeventcreated,incommercialterms,arealandsubstantial
problem,onethatmakesperformancecommerciallyunfeasible.30
Insum,andintheabsenceofclearwordstothecontrary,thesupplierwasnotexcusedfrom
nonperformancebyaforcemajeureeventifthesoleconsequenceofthateventistodrivehim
tobuyfromanothersupplierandmakeasmallerprofit. Thesupplierwouldbeexcused,
however,ifthatsolution,inallthecircumstances,isnotreasonable.31
AnewtrialwasorderedandAtcorandContinentalsettledpriortotrial. Accordingly,itis
difficultto
predict
just
what
the
reference
to
"commercially
unfeasible"
would
have
meant
whenappliedtothefactsofthatcase. Onecaseonpoint,andwhichwasreferredtoinAtcor,is
theEnglishcasereferredtoastheWildhandel,32acaseinvolvingsaleofChinesefrozenrabbits.
Thesupplierclaimingforcemajeurewasunabletomeettheheavyburdenimposedonitto
30Ibid.11(andrepeatedforgoodmeasureat17).
31Ibid.35.
32P.J.VanDerZijdenWildhandelN.V.v.Tucker&CrossLtd.,[1975]2LloydsRep.240(Q.B.)[Wildhandel].
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establishthatitwasunabletoacquireanalternatesupply,regardlessofprice,inordertogain
thebenefitofforcemajeure. Thisresultseemsharshandmayalsoignoretheconceptof
commercial
reasonability.
However,
it
might
still
be
considered
consistent
with
the
heavy
burdenonthepartyseekingtodemonstratethelackofcommerciallyreasonablemitigation
measureswhenforcemajeureisdeclared.
BasedontheAtcordecision,partiesnegotiatingforcemajeureclausesmustbeawareofan
additionalimplieddutytomitigate,oncommerciallyreasonableterms,theadverseeffectson
theotherpartywhichmayarisefromforcemajeureevents. Anyoustingofthisimpliedduty
will,asstatedinAtcor,requireclearandunequivocallanguage.33 Theexistenceofastandardof
"commercialreasonableness"providessignificantroomforuncertaintyandambiguitytothe
unwaryorcarelessdrafter. Inordertoavoiddisputesandunforeseenliabilities,theextentto
whichapartydeclaringforcemajeuremustmitigatetheeventanditsconsequencesshouldbe
specifiedinthecontract.
TheextentofAtcor'sinfluenceonAlbertaforcemajeurejurisprudenceis,however,anopen
question. The2000decisionoftheAlbertaCourtofQueen'sBenchinH&RDrillingInc.v.Aquilo
EnergyInc.isacaseinpoint. H&RwasbuildingadrillingrigforAquilo,whoneededtherigfora
specificwellthatcouldonlybedrilledshortlyafterthescheduledcompletiondate. Whenthe
rigwasabout90%complete,afireoccurred,triggeringforcemajeure. Asaresult,H&R
deliveredtheriglaterthanoriginallycontemplated. Intheinterim,Aquilowasforcedtolook
elsewhereforarigtogetthejobdone. Aquilotriedtosetoffthecostsitincurredinseekingan
alternaterigagainsttheamountsitpaidtoH&R. Theforcemajeureclausecontemplateda
specificdutytomitigate:
The performance of any suspended obligation shall be resumed as soon as reasonably possible
aftersuch
[force
majeure]
cause
ceases
to
exist.
34
AquiloallegedthatH&Rdidnotuseitsbesteffortstocompletetherigafterthefire,35andalso
arguedthatinanyevent,H&RwasresponsibleformitigatingtheeffectonAquilooftheforce
majeureeventbyfindingandfundinganalternaterig. ItwasacceptedthatH&Rhadadutyto
completetherigdespitethefirethroughtheextentofthatdutywasdebated. TheCourtlimited
thisdutybyimposingadefactocommercialreasonablenessstandard,statingthatH&Rwasonly
requiredtocompletetherig"asfastasreasonablyandprudentlypossible"asopposedtoasfast
aspossibleashadbeenurgedbyAquilo. TheCourtheldthatH&Rhaddoneso.
TheCourtalsorefusedtoholdH&Rresponsibleforfindingandfundingareplacementrig. The
reasoningisverybrief,andseemstobebasedontheviewthatsuchanobligationtomitigate
theeffect
of
the
force
majeure
would
need
to
be
expressed
clearly
in
the
written
contract.
The
doctrineofcommercialreasonablenesswasnotaddressedinthiscontext,norwastheAtcor
casecited.36Thatbeingsaid,theCourthadobviouslyentertainedbothevidenceandargument
33Atcor,supranote2935.
342000ABQB42014.
35Ibid.15.
36Ibid.23.
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onthemeasurestakentoreducetheeffectsonAquilooflatecompletion. The"commercial
reasonableness"ofH&R'sconductwasthusconsideredrelevanttowhetherH&Rhadsatisfied
any
duty
to
mitigate
the
effects
of
the
force
majeure
event.
Though
H&R
does
not
shed
light
on
thenatureof"commercialreasonableness"requiredinthecontextofforcemajeure,itdoes
appeartosupporttheconcepttheremaybeadutytomitigateboththeeventandtheeffectof
forcemajeure.
Itissubmittedthatifbyraisingtheconceptof"commercialreasonability"theAlbertaCourtof
Appealintendedtomoveawayfromthestrictinterpretationhistoricallyaccordedtosuch
clausesasdemonstratedbytheSupremeCourtofCanadaintheAtlanticPapercase,theresult
isarguablytointroduceadditionaluncertaintyintoaconceptthathashistoricallyprovenitself
tobetroublesomeofinterpretationforcommonlawcourts. Thatsaid,itmaybethatthe
conceptof"commercialreasonableness"issimplyarecognitionofeventsclosertowhatis
generallyperceivedtobeimpossibilityofperformanceasreferredtoinAtlanticPaperand
consistentwith
the
use
of
the
term
"impracticability"
in
the
U.
S.
Certainly,otherCanadiancourtshaveproceededbywayofstrictinterpretationininterpreting
suchclauses. InFisheryProductsInternationalLtd.v.MidlandTransportLtd.37thedefendant
contractedtotransportfreshfishfromNewfoundlandtocentralCanadabytruck. Whileen
route,thetruckswereobstructedbyindependenttruckersconductingapoliticalprotestwhich
causedtwoofthethreetruckstobedelayedsufficientlytocausethefishtofailinspection. The
BillofLadingunderwhichthecontractwasbeingcarriedoutprovidedinpartasfollows:
"Thecarriershallnotbeliablefortheloss,damageordelaytoanyofthegoodsdescribedinthe
BillofLadingcausedbyanactofGod, theQueen'sorpublicenemies,riots,strikes,adefector
inherentvice in thegoods,anactordefaultof theconsignor,ownerorconsignee,authorityof
law,quarantine,ordifferenceinweightsofgrain,seedorothercommoditiescausedbyanatural
shrinkage."38
AnappealtotheNewfoundlandCourtofAppealaroseafterthetrialJudgefoundthattheforce
majeureclausehadbeenproperlyinvokedbyMidlandandthatitrelieveditofitsobligations.
TheCourtofAppealoverturnedthatdecisionfindingthat"strikes"referredtoactionsby
employeesofthecompanyinvokingtheforcemajeureclauseandthatitdidnotextendtothe
truckers'blockade. Further,thecourtheldthatthe"Queen'sorpublicenemies"didnotinclude
citizensofthestatewhosimplybreakthelaw.
Attheheartofthecommonlawofcontractisthenotionthatwhereapartyagreestoa
contractualobligation,thatpartyisliablefordamageswhentheobligationisnotmet. Itis
presumedthatpartiesintendtobeboundtoperformtheirbargain. Consistentwiththisnotion,
Courtsare
wary
of
those
terms
that
attempt
to
remove
or
limit
liability
for
non
performance.
Exclusionclauses,restrictivecovenantsandlimitationsareexamplesofthistypeofclause. Such
"exculpatory"provisionstendtobeinterpretednarrowlyor"strictly"becausetheytendto
37(1994),113D.L.R.(4
th)651(Nfld.C.A.).
38Ibid.at653.
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relievepartiesfromcontractualobligations. Insofarasforcemajeureprovisionsareconsidered
tobeexculpatory,whichundoubtedlytheyare,theywillbestrictlyandnarrowlyconstrued.39
Wheninterpreting
contracts,
Courts
strive
to
give
effect
to
the
intention
of
the
parties
to
a
contract. Theintentionofpartiesisgenerallytobederivedexclusivelyfromthewordsofthe
contractitself,asevidenceofsubjectiveintentisinadmissible. Toassistindetermining
contractualintention,numerousinterpretiveruleshavedeveloped. Someoftheseruleshave
particularrelevanceforpartiesdraftingandconsideringforcemajeureclauses:(i)theconceptof
"strictconstruction"includingtheejusdemgenerisrule;(ii)theconceptof"commercial
reasonableness";and(iii)thecontraproferentemrule.
Oneinterpretiveprincipleoftenutilizedtoarriveatanarrowconstructionisejusdemgeneris.
Theprincipleisasfollows:
Wheretherearegeneralwordsfollowingparticularandspecificwords,thegeneralwordsmustbe
confinedto
things
of
the
same
kind
as
those
specified.
40
Ejusdemgenerisisofparticularrelevancetoforcemajeureclausesthatincludeadetailedlistof
triggeringevents. Agoodexampleistheuseofthisprincipletoconstrueaforcemajeureclause
inAtlanticPaper.41 Forcemajeurewasbeingclaimedbythepurchaserofwastepaperusedin
theconstructionofcorrugatedmedium. Thispurchasermanufacturerclaimedthatitsinability
tofindaprofitablemarketforitsfinishedproductconstitutedaneventofforcemajeureunder
itspurchasecontractwithitswastepapersupplier. Thepurchasecontractinquestiondefined
forcemajeurebywayofalistofevents(i.e.actsofGod,war,damageordestructionto
productionfacilities). Thelistconcludedwiththephrase"orthenonavailabilityofmarketsfor
pulporcorrugatingmedium."
Indetermining
whether
the
market
situation
faced
by
the
manufacturer
fell
within
this
concludingphraseofthedefinition,theCourtappliedtheejusdemgenerisprincipletoholdthat
thephraserelieduponmustbeinterpretedsoastolimititsapplicationtoeventslikethose
previouslydescribed,"overwhichthe[partyclaimingsuspensionofthecontract]exercisesno
control,"42andwhich"makesperformanceimpossible".43 Sincethemarketfortheproductsof
thepurchasermanufacturerhadbeenfoundtobemateriallyunchangedfromthetimeofthe
executionofthecontract,thepurchaser'sclaimthatthelackofaprofitablemarketforits
finishedproductconstitutedaneventofforcemajeurecouldnotbesustained. Thepurchaser
hadsimplyenteredintoabusinessarrangementwhichatthetimeofcontracting,andatthe
timeoftheallegedforcemajeure,wasunprofitable.
39Atcor,supranote29.
40Reg.v.Edmunson(1869),28L.J.M.C.213at215perLordCampbell,C.J.citedinD.A.Dukelow,DictionaryofCanadianLaw,
2ded.(Toronto:Carswell,1995)at375;seealsoathoroughdiscussionofthisruleanditsapplicationinR.Sullivan,ed.,
DriedgerontheConstructionofStatutes3ded.(Toronto:Butterworths,1994)at203213.
41AtlanticPaper,supranote1at411.
42Ibid.at41112.
43Ibid.at411.
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III. RequirementsforForceMajeureGenerally,relianceuponaforcemajeureclauserequiresthatoneormoreofthefollowing
conditionsbe
fulfilled:
(1) thespecifiedeventisbeyondthecontroloftheclaimingparties;
(2) theeventpreventsordelays,inwholeorinpart,theperformanceofthe
contract;
(3) theeventmakesperformanceofthecontractimprudent,substantiallymore
difficultorsubstantiallymoreexpensive;
(4) theeventwasnotduetothefaultornegligenceoftheclaimingparty;and
(5) theclaimingpartyhasexercisedreasonablediligencetoovercomeorremove
the
specified
force
majeure
event.
44
Whendraftingforcemajeureclausesitisnecessarytoensurethatfourkeycomponentsare
addressed:
(i) adescriptionofeventsthatcantriggerforcemajeure;
(ii) termsthatdefinethedurationofthatcondition;
(iii) anoticeprovisiondescribinghowadeclarationofforcemajeureistobe
communicated;and
(iv) adescriptionoftheaffectsthataforcemajeureeventwillhaveonthe
contractualobligationsoftheparties.
Eachoftheseelementsisdiscussedbelow.
IV. TriggeringEventsTheAngloAmericanlegaltraditionistoexpresslydefinetheeventoreventsthatwillenablea
declarationofforcemajeureratherthanmerelyrelyingonthegeneralconceptofforcemajeure.
Commonlyincluded"actsofGod"flood,fire,war,civildisturbance,governmentalorjudicial
ordersoractions,sabotage,explosion,landslides,lightning,earthquakes,fires,storms,floods
andwashoutsarecommonlyincludedaseventsthattriggerforcemajeure. Asnoted,in
commonlawjurisdictionsitisalsocommontocustomizeaforcemajeuretothetypeofproject
orindustrytowhichitisbeingapplied.
V. Duration/MitigationThedurationoftheforcemajeureconditionmustbedefinedwithinthecontract. Usually,itis
expressedtocorrespondtotheperiodduringwhichthesituationgivingrisetoitcannotbe
overcome. Anywelldraftedforcemajeureclausewillcarrywithinitanexpressdutytomitigate.
44DonGreenfieldandBobRooney,AspectsofInternationalPetroleumAgreement(1999)37Alta.L.Rev.35272.
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Inmostcontracts,thepartydeclaringforcemajeuremust,sofaraspossible,remedythe
situationwithduediligenceor"withallreasonabledispatch". Whiletheobligationdescribed
clearly
includes
a
duty
to
mitigate
the
force
majeure
event
itself,
what
is
less
clear
is
whether
thedutytomitigatealsoincludesadutytomitigatetheaffectsoftheforcemajeureevent.
Asamatterofconcept,thedistinctionmayappearsubtlebutitcanbeofgreatimportanceas
illustratedbyseveralcasesdecidedinAlbertaandTexasinrelationtogassupplycontracts. In
TejasPowerCorp.v.AmeradaHessCorp.45anumberofAmerada'swellsfroze,whichlimitedits
upstreamsupplyandwhichwascontemplatedasatriggeringeventundertheforcemajeure
clause. Ameradacurtaileditssupplyofnaturalgastosomebutnotallofitscustomersand
insteadselectivelychosethosetowhomitwouldmakedeliveries. Tejasmadetwoarguments
seekingtoholdAmeradaresponsibleforfailingtomitigate,nottheforcemajeureevent,butthe
effectonTejasoftheforcemajeureevent. Inthatregard,itarguedfirstlythatAmeradaought
tohaveapportioneditslimitedsupplyofgasamongallaffectedcustomers. Thisargumentwas
rejectedon
the
basis
that
the
court
held
that
Amerada
could
allocate
as
it
pleased
so
long
as
suchallocationwas"fairandreasonable". Theonlyexperttestimonypresentedattrial
indicatedthatAmerada'sallocationwasindeedfairandreasonable.
Second,Tejasarguedthattheavailabilityofgasonthespotmarketwouldhaveallowed
Ameradawith"duediligence"to"overcome"theaffectsoftheforcemajeureeventasrequired
bythecontract.46 Tejas'positionwasthatadutyexistedtomitigatetheaffectsofforcemajeure
asopposedtotheeventitself. TheTexasCourtofAppealrejectedthisargumentnotingthatto
accepttheargumentwouldbeto"rewriteacontractorinterpretitinamannertheparties
neverintended".
IntherecentAlbertacaseofAndroscogginEnergyLCv.ProducersMarketingLtd.47alarge
numberof
Producers'
wells
were
shut
in
by
an
Alberta
regulatory
board
and
force
majeure
was
declaredbyProducers. AstheLearnedTrialJudgeobserved:
Section15.2(b)requiresthenonperformingparty, inthiscasetheseller[Producer'sMarketing],
toexerciseallreasonableeffortstocontinuetoperformitsobligationsundertheagreementand
toremedyexpeditiouslyitsinabilitytodoso. Ifthesellerisunabletosupplygasduetoanevent
offorcemajeure,anyreductioninsupplyistobeapportionedamongthevariouspurchaserswho
sharesimilarcontractsasthebuyeronaproratabasis.48
Intheresult,thecourtorderedProducersMarketingto"doallthingsnecessarytoassurethe
supplyof11,000gigajoulesperdayofnaturalgas"toAndroscoggin.49 Accordingly,inthissense
thecourtfoundadutytomitigatenotjusttheforcemajeureeventitself,butalsotheeffectsof
theforcemajeureevent.
45Tex.App.LEXIS6014(C.A.14
thDistrictHouston,1999)[Tejas].
46Tejas,supranote45at6.
47[2003]A.J.No.1701(QL)[Androscoggin].
48Ibid.14.
49Androscoggin,supranote4732.
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Ontheotherhand,adifferentresultarosefromthedecisioninApacheCorp.v.VirginiaPower
EnergyMarketingInc.50 ThiscasearosefromlitigationflowingfromhurricanesKatrinaandRita
in
2005.
As
a
result
of
the
hurricanes,
Apache's
ability
to
produce
and
deliver
gas
was
disrupted
andApachedeclaredforcemajeureandcurtaileddeliveriestoVirginiaPower. Thecontract
betweenthepartiesprovidedinpartasfollows:
"11.2:A Seller andBuyershallmake reasonableefforts toavoid the adverse impactsofaforce
majeure and to resolve the event or occurrence once it has occurred in order to resume
performance."
VirginiaPowercontendedthatApacheshouldhavedeliveredgastoalternatedeliverypointsare
foundontheopenmarketothergasfordeliveryatthealternativedeliverypoints. Thecourt
rejectedtheseargumentsandnotedthatApache'sobligationsexpresslyrequiredallreasonable
effortsatresumptionofperformancebuttheydidnotexpresslyrequirealternateperformance
incaseofaforcemajeureevent. Attrial,itwasheldthattherewasnoobligationtosupplygas
atalternate
delivery
points
and
further
noted
that
in
any
event,
an
implied
obligation
to
purchasealternatesuppliesontheopenmarketwouldbeanunlimitedobligation,andwould
rendertheforcemajeureprovisionsallbutmeaningless.
BasedontherecentU.S.casesitappearsthatthecourtsthereareapplyingastrictandnarrow
interpretationtotheobligationtomitigate,particularlywithrespecttotheextentofmitigation
requiredofthedeclaringparty. Untilothercasesarise,itisunclearwhetherthestandardof
"commercialreasonableness"willcausetheAlbertacourt,andthoseofotherprovinces,amore
expansiveviewofthatrequirement.
Whendrafting,itmaybeimportanttoexpresslydisclaimcertainaspectsofthedutytomitigate.
Forexample,inrelationtolabourdisputes,thepartieswillwishtoensurethattheyarenot
subjectboth
to
the
demands
of
its
work
force
during
the
dispute
and
the
possibility
of
having
to
paycontractualdamagesforfailingtosettlelabourdisputes. Accordingly,manyforcemajeure
clausesrecognizethisrealitybyincludingclausessuchasthefollowing:
Theobligationsofthepartygivingnoticeofforcemajeuresofarastheyareaffectedbysuchforce
majeure,shallbesuspendedduringthecontinuanceofany inabilitysocaused,butforno longer
period,suchacause,shall,sofaraspossible,beremediedwithallreasonabledispatch;provided
however,thatthisprovisionshallnotrequirethesettlementofstrikesorotherconcertedactsof
workers by exceeding to the demands of the opposing parties when such course, in its sole
discretion,isconsideredunreasonable.
Whilethedutytomitigateassumesthatforcemajeureevents(andtheireffects)areonly
temporary. Thequestionarisesastowhathappenswhenaneventtriggeringforcemajeure
becomespermanent?
For
instance,
many
force
majeure
clauses
state
that
certain
detrimental
changestostatutoryorregulatoryenvironmentscanamounttoforcemajeure. Theseevents
maybepermanent,andifso,mayeffectivelyterminatethecontract. Inthissense,the
terminologyof"temporary"and"permanent"seemsinaptbecausealaw,aregulationororder
canalwaysberepealedandisthereforeneverpermanentintheliteralsense. However,literal
permanenceisnotrequired. CommonwealthEdisonv.AlliedGeneralNuclearServices51
50CauseNo.200576899(D.C.157
thDistrictTexas,2007)[Apache].
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explainedthedifferencebetweentemporaryandpermanentconditionsinforcemajeure
clauses:
The
point
of
distinguishing
between
temporary
and
permanent
conditions
constituting
impossibilityor impracticabilityorforcemajeure ismerelytopreventthepromisorfromwalking
away from the contract because of some transitory impediment to performance. When
conditions preventing performance persist throughout the life of the contract, they are
permanent enough to excuse liability. It would be neither efficient nor fair to impose on the
promisoraperpetualdutyofreadinesstoperformifandwhentheregulatorybanwaslifted.52
Theconceptisclear,butatwhatstageaforcemajeureconditionhassufficientpermanenceand
impacttoallowabandonmentofallcontractualobligationsisnot. TheCourtinCommonwealth
Edisonprovidedsomeassistanceinthisrespect,statingthattheapplicabledutytomitigatedid
notrequireperformanceif,afteratemporaryforcemajeuremoratoriumwaslifted,
performancewouldbe"materiallymoreburdensome"thaniftheforcemajeureeventhad
neveroccurred. Howthis"materiallymoreburdensome"standardmightbeinterpretedina
givencaseisdifficulttopredictandhasnotbeentestedinanysignificantbodyofcaselaw.
Referencetotherequirementsofcontractualfrustration(destructionofthe"entiresubject
matter",oroftheunderlyingrationaleofthecontract)couldalsoberelevantwhenconsidering
thisissue.
VI. NoticeAthirdkeyaspectforcemajeureclausesisanoticerequirement,providingacondition
precedenttoadeclarationofforcemajeure. Typically,aforcemajeureclausewillincludea
fairlygeneralnoticeprovision,suchasinthefollowingexample:
Uponsuchpartygivingnoticeandreasonablyfullparticularsofsuchforcemajeure inwritingto
theother
party
within
areasonable
time
after
the
occurrence
of
the
cause
relied
on
...
53
Whennoticeisproperlygiven,forcemajeureprotectionnormallycommences(retroactively)
fromthetimeofthetriggeringeventitself. Inmanyinstances,forcemajeureclauseswilltreata
failuretogivenoticewithinaparticulartimeframeasabarriertovaliddeclarationeven
whereaforcemajeuretriggeringeventhasbeenknowntooccur(suchasahurricane,for
example). Thelogictoprovidingareasonablenoticeperiodafterthetriggeringeventistogive
apartyanopportunitytocureormitigatetheforcemajeureeventwithoutnecessarilyhavingto
makeadeclaration. Insomeinstances,the"actsofGod"andothereventsenumeratedwithina
forcemajeureclausemaynothaveamajorimpactuponoperations,andinsuchinstances,
declarationsofforcemajeuremayprovetobecounterproductivetothepartyentitledtomake
suchadeclaration.
51WL37744(Mar.23,1990),affirming731F.Supp.850(N.D.1111990)[CommonwealthEdison].
52Ibid.
53Ibid.
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Afailuretoproperlygivenoticewillbefataltoadefencebaseduponaforcemajeureclause.54
Strictadherencetonoticerequirementsisusuallynecessary. Forexample,inInternational
Minerals
&
Chemical
Corp.
v.
Llano,
Inc.,
55
a
buyer
notified
the
seller
that
its
gas
consumption
wouldbereducedbecauseoftesting,butnotthatitsreducedconsumptionwouldbe
permanent. Thebuyerarguedthatthenoticewassufficienttoallowapermanentreductionin
volumesundertheforcemajeureclause. TheUnitedStatesCourtofAppealfoundthatthiswas
notpropernoticewithinthemeaningoftheforcemajeureclausewhichrequiredthat"theparty
whoseperformance...issoaffectedshallimmediatelynotifytheotherpartyofallpertinent
facts...". Thenoticedidnotindicatethepertinentfactthatreducedconsumptionwouldbe
permanent.56
VII. EffectonContractualObligationsThepreciseeffectofaforcemajeureeventonthecontractualobligationsofthepartiesmust
alsobe
addressed
in
the
contract.
For
example,
particular
contractual
obligations
may
be
ended,suspended,ormerelyaltered. Thefollowingisanexampleofaclauseunderwhich
contractualobligations(butonlythosenotinvolvingpayment)aresuspendedforalimited
periodcoincidingwiththeforcemajeureevent:
ExceptwithregardtoBuyer'sorSeller'sobligationstomakepaymentsdueunderthisAgreement,
intheeventeitherpartyhereto isrenderedunable,whollyor inpart,byforcemajeuretocarry
out itsobligationsunderthisAgreement,andwhichbytheexerciseofduediligence,suchparty
couldnothavepreventedorovercome,itisagreedthat,thentheobligationsofthepartygiving
notice,sofarastheyareaffectedbysuchforcemajeure,from its inception,shallbesuspended
duringthecontinuanceofanyinabilitysocausedbutfornolongerperiod. Eitherparty'sinability
toperformshall,asfaraspossible,beremediedwithallreasonabledispatch.57
When
drafting
force
majeure
clauses,
it
is
important
to
separate
the
contractual
obligations
that
remaininforcethroughouttheevent(ifany)fromthosethataresuspendedormodified.
Moreover,iftheunderlyingcontractcontemplatesobligationscontingentonthepassageof
time,theforcemajeureclauseoughttoaddresstheeffectthatanysuspensionsduetoforce
majeuremighthaveontheseperiods. Althoughtheprotectionofforcemajeureisintendedas
temporaryprotectionagainstunavoidableevents,thepassageofkeytimeframes(suchasan
expirationorterminationdate)whileapartyiswithintheprotectionofforcemajeuremaylead
tounintendedconsequencesunlessdirectlycontemplatedandaddressedwithintheclause.
Partiesdraftingornegotiatingcontractsinvolvingforcemajeureclauseswillalsowanttoturn
theirmindstowhetheralltriggeringeventsshouldhavethesameimpactsoncontractual
54InternationalMinerals&ChemicalCorp.v.Llano,Inc.,770F.2dat885;ResourcesInvestmentCorp.v.EnronCorp.669F.Supp.1038at104344
(D.Colo.1987);SuperiorOilCo.v.TransoEnergyCo.,616F.Supp.98at108109(W.D.Ia.1985).
55770F.2dat885(1985).
56SabineCorporationv.ONGWestern,Inc.,725F.Supp.1157at1169(W.D.Okla.1989).
57VectorPipelineInc.,LinePackGasPurchaseAgreement(Dresdon,ON:VectorPipeline).
Online.AccessedAugust15,2007[Vector
Agreement]atArticle12.
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obligations. Forexample,doesanoperationalfailureorlabourstrikereallywarrantthesame
relieffromperformanceobligationsthatmightotherwisebeappropriateinanearthquake?
VIII. ConclusionThedraftingofforcemajeureclauses,ratherthanmerelyinvolvingtheselectionofboilerplate
wording,shouldbeapproachedfromtheperspectivethatitrepresentsbothacentralpartof
theproperriskallocationschemeofaparticularprojectbutalsoanopportunitytoselect
wordingwhichcanassistinreducinguncertaintyandensuringthatriskultimatelyresideswhere
intended.
Itisaccordinglycriticalthatathoroughreviewofthefundamentalelementsofsuchclauses
includingtriggerevents,duration,noticeandtheeffecttheeventsdescribedintheclauseareto
haveoncontractualobligationsbeconsideredasconstituentelementsofawelldraftedclause.
top related