What are Force Majeure Contract Clauses?

In March, the Illinois governor suspended dining in restaurants due to the coronavirus (COVID-19) pandemic. In response, an Italian restaurant in Chicago stopped paying its rent. Subsequently, the landlord sued, but the court held the restaurant only had to pay 25% of the rent due.

Why? The restaurant’s lease had a force majeure clause.

What is a force majeure clause?

“Force majeure” is French for superior force. It’s just a fancy (and confusing) name for a standard clause (provision) often included in contracts, such as commercial leases.

Force majeure clauses are also known as “Act of God” clauses. They can excuse people or businesses who enter into contracts from doing what they promised—such as paying rent.  

But this can occur only if there is a supervening event over which a party to a contract has no control. For example, a force majeure clause could excuse you from performing if there is a hurricane, war, or fire.  

What events excuse performance?

The force majeure event must make your performance inadvisable, commercially impracticable (very difficult), illegal or impossible.  

In the Italian restaurant case, the coronavirus pandemic affected paying the full lease payments the restaurant owed impracticable because most of its business got eliminated by the state’s stay-at-home order.

Similarly, you might get excused from fulfilling a contract if your office shuts down due to a government shelter-in-place order.

However, you’re not excused from performing if fully capable, but rather not because it’s inconvenient or more expensive than you originally bargained for.

Every force majeure clause is different

A standard force majeure clause doesn’t exist. In reality, they differ from contract to contract.

Typically, such a clause lists all the events that excuse or delay performance. Common examples include: “acts of God,” war, terrorist attacks, riots or civil insurrection, earthquakes, hurricanes, tornados, floods, famine and fire.

A force majeure clause may also include disease, contagion, pandemics or epidemics, but not always.  

There may also be a catchall provision excusing performance for by any event beyond the reasonable control of the affected party.  

Here’s an example of a force majeure clause:  

“Neither Party shall be liable for any failure or delay in performance of its obligations under this Agreement arising out of circumstances beyond its reasonable control, including, without limitation: acts of God; earthquakes; fires; floods; wars; civil or military disturbances; acts of terrorism; sabotage; strikes; epidemics; riots; power failures; computer failure; accidents; labor disputes; or governmental actions.”

Force majeure clauses are strictly construed

If your contract has a force majeure clause, read it carefully.

As a rule, force majeure clauses are strictly construed by the courts. In layman’s terms, it means they follow what the clause says without any additions.

Thus, if the clause does not specify a particular event, it may not excuse nonperformance.

If a force majeure clause specifically lists pandemics, epidemics, contagion or diseases, the coronavirus pandemic is likely covered by the clause.

But, a clause that doesn’t mention pandemics or contagion might not apply to the coronavirus.  

A court could conclude that the pandemic falls under an “Act of God” or catchall provision. If your business is subject to a government shutdown order, it could constitute an act of government. However, it’s not entirely clear.  

If you’re not sure whether a force majeure clause in a contract you’ve signed excuses your performance seek legal help.