The speed and severity by which the global health crisis has impacted businesses and individuals is unprecedented. Businesses have closed, events have been cancelled, and even the 2020 Tokyo Olympics has been postponed until 2021. What happens to all those who cannot perform their contractual duties because of the health crisis? What about those relying on others to fulfill their contractual obligations?
Under Texas law, “… an act of God does not relieve the parties of their obligations unless the parties expressly provide otherwise.” GT & MC, Inc. v. Texas City Ref., Inc., 822 S.W.2d 252, 259 (Tex. App.-Houston [1st Dist.] 1991, writ denied). In other words, your failure to perform your contractual obligations due to circumstances beyond your control is generally not an excuse unless specific language in your contract allows for it.
To avoid contractual liability for failing to perform due to unforeseen events like flooding, fire, storms, war, and pandemics, contracts frequently contain “force majeure” provisions, which are enforceable under Texas law. There is no such thing as a “standard” force majeure clause, which means that the “scope and effect of a force majeure clause depends on the specific contract language, and not on any traditional definition of the term.” Virginia Power Energy Mktg., Inc. v. Apache Corp., 297 S.W.3d 397, 402 (Tex. App.-Houston [14th Dist.] 2009, pet. denied). Moreover, force majeure clauses often contain provisions applicable to specific industries.
Despite the unlimited possibilities, most force majeure clauses: (1) specify specific force majeure events; (2) include a catchall provision; (3) state how it is to be invoked; and (4) require some type of notice. An example of a force majeure provision follows:
Should performance of any obligation created under this Agreement become illegal or impossible by reason of fire, flood, storm, act of God, governmental authority, labor disputes, war or any other cause not enumerated herein but which is beyond the reasonable control of the Party whose performance is affected, then the performance of any such obligation is suspended during the period of, and only to the extent of, such prevention or hindrance, provided the affected Party provides reasonable notice of the event of force majeure and exercises all reasonable diligence to remove the cause of force majeure.
Because your liability (or ability to maintain a claim) based under a contractual force majeure clause depends entirely on the specific language used in the provision, it is imperative that you consult with a qualified attorney well versed in contract law to evaluate: (1) the facts of your case, (2) the language of your force majeure clause, and (3) the standards you are being held to before invoking a force majeure provision. Moreover, even if your contract does not have a force majeure provision, consult with a seasoned attorney to determine whether other common law doctrines like frustration or impossibility of purpose may be applicable to your specific situation.