0311 Force Majeure Clauses Construction Contracts

7/30/2019 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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fmclaw.com 9

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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fmclaw.com 10

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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fmclaw.com 11

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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fmclaw.com 12

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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fmclaw.com 13

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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fmclaw.com 14

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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fmclaw.com 15

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.

Documents

0311 Force Majeure Clauses Construction Contracts