Force Majeure in Construction: Understanding the Impact of Unforeseeable Circumstances
Force majeure is a French term that translates to “superior force” and refers to events beyond the control of the parties involved in a contract that make it impossible to fulfill their obligations. In the construction industry, force majeure is a commonly used clause in contracts that provides a mechanism for contractors and owners to deal with unexpected events that disrupt the normal course of construction.
Examples of force majeure events in construction include natural disasters such as hurricanes, earthquakes, and floods, as well as pandemics like COVID-19, labor strikes, and government-imposed restrictions. These events can have a significant impact on construction projects, causing delays, increased costs, and, in some cases, termination of the contract. Force majeure clauses vary in their wording, but typically include a list of events that are considered to be beyond the control of the parties, and provide a framework for how the parties should deal with the consequences of these events. For example, a force majeure clause might provide that the affected party is excused from performing its obligations under the contract for a specified period of time or until the event has passed, or it might provide that the contract is terminated if the event cannot be overcome.
The COVID-19 pandemic has highlighted the importance of force majeure clauses in construction contracts, as it has disrupted construction projects around the world. In many cases, contractors and owners have had to rely on their force majeure clauses to deal with the impacts of the pandemic, including supply chain disruptions, labor shortages, and government-imposed restrictions on construction activities.
In order for a party to successfully invoke the force majeure clause in a construction contract, it must first show that the event in question is covered by the clause. This means that the event must be one of the specified events listed in the clause, and it must be shown to be beyond the control of the parties. The party must also demonstrate that the event has made it impossible or impracticable for it to perform its obligations under the contract.
If a party is able to successfully invoke the force majeure clause, it will typically be excused from performing its obligations under the contract for a specified period of time, or until the event has passed. In some cases, the contract may be terminated if the event cannot be overcome.
However, it's important to note that force majeure clauses are not a get-out-of-jail-free card for parties who are unable to fulfill their obligations under a contract. There are some events that may be considered force majeure, but may not be covered by the specific force majeure clause in the contract. For example, a general force majeure clause may not cover specific events like labor strikes or government restrictions, so it's important for parties to carefully review the language of their force majeure clauses to determine whether a particular event is covered.
In addition, parties should also be aware of the limitations of force majeure clauses. For example, some clauses may require the party to take certain steps to minimize the impact of the event, or to make best efforts to overcome the event. The party may also be required to provide notice to the other party in a timely manner in order to invoke the clause. In conclusion, force majeure clauses play an important role in construction contracts by providing a mechanism for contractors and owners to deal with unexpected events that disrupt the normal course of construction. However, it's important for parties to understand the limitations of these clauses, and to carefully review the language of their contracts to ensure that.