Force majeure: what is it?

A pandemic or a sudden wartime situation can create circumstances that prevent you from doing what you have undertaken to do. Normally, you are then responsible for the damage to the other party. Force majeure: what is it? And what can you do to protect against force majeure in the future?

A deal is a deal. Entering into an agreement creates obligations. One party provides a good or service, and the other pays for it. You agree on what will be delivered, how much, to whom, when and for how much. 

Your agreement usually includes terms and conditions. The 'small print'. It includes agreements on payment terms, liability and warranty, for example. It may also specify the circumstances under which a party does not have to fulfil its obligations under the contract. After reading this article, you will know what a force majeure clause is, when force majeure arises, and how to refer to it properly in your terms and conditions. 

What is force majeure? 

In your general terms and conditions, you can include a clause on force majeure and what it means for the contract. For example, it can happen that your customer does not pay or deliver because of a pandemic or a sudden outbreak of war somewhere in the world. This is called 'force majeure' or an 'act of God'. A force-majeure clause often sets out just what constitutes force majeure: disease, natural disasters, unexpected government measures, quarantines, an epidemic, war or other obstacles, and so on. 

Legal rules on force majeure 

Have you not made arrangements for force majeure in the contract or through general terms and conditions? Then the legal rules on force majeure (article 6:75 BW in Dutch) apply. According to the law, force majeure occurs when there is nothing a party can do to fulfil their obligations. It is not their fault. They are not to blame. Fulfilment of the agreement can then no longer reasonably be required. Consider, for example, the consequences of a natural disaster. 

Are you unable to deliver completely or temporarily because, for example, your supplier is in trouble? In your case, if there is a reasonable way to still deliver or provide the service via another route, then there is no force majeure. 

In practice, it proves difficult to invoke force majeure under this article of the law. You have to prove yourself that you really could not have foreseen the cause preventing you from doing what you had agreed to do. And that you could not have insured yourself for the risk. That is usually hard to prove. 

The article of law defines force majeure in general terms. Therefore, it is wise to include a force-majeure clause in your general terms and conditions yourself. In it, you describe exactly what you mean by force majeure. 

Successful invocation of force majeure 

As a general rule, you are liable for the other party's damages if you breach the contract. Force majeure is the exception. These are the main consequences of the successful invocation of force majeure: 

  • If you fail to honour the agreement, you are not liable for any resulting damages.
  • You may have to honour only part of the agreement.
  • You may temporarily put off your obligation to fulfil the agreement.
  • Either party may terminate the agreement, for example after a certain period of time.

Unforeseen circumstances 

If invoking force majeure fails, there may be another escape. In addition to the rule on force majeure, the law also has a rule on unforeseen circumstances (article 6:258 of the Civil Code in Dutch). A judge can, if requested by either party, modify the agreement if there are unforeseen circumstances. This is not that likely to happen. The circumstances must be severe, and it must be the case that you really could not see them coming beforehand. It looks very much like force majeure, but a judge will not be so ready to accept that this is what is involved, and the conditions are even stricter. 

Force majeure or unforeseen circumstance 

If you entered into an agreement before the COVID-19 crisis, for example, and then ran into difficulties in fulfilling your commitments because of all the measures, the crisis or its consequences could be a reason for force majeure or unforeseen circumstances. Because COVID-19 was a pandemic, there were more grounds for assuming force majeure or unforeseen circumstances in connection with it. 

If you made a deal during the COVID-19 crisis and then ran into trouble, that is a different matter. The risks and consequences associated with a contract might have been more foreseeable, and that way you would be less likely to invoke force majeure or unforeseen circumstances, if you could at all. Unless, for example, the government took measures at a later stage that were so harsh and unexpected that no one could have foreseen them. 

Do you rely on providers from war-torn areas such as Ukraine for deliveries to your customer? Then the above also applies. Did you make deals before the war broke out and you can no longer deliver because of that? Chances are, then, that you can successfully invoke force majeure or unforeseen circumstances, unless you have other reasonable alternatives that will allow you to fulfil. Are you entering into agreements with suppliers from areas where you know war is in the air or there is actually already a war going on? Then a claim of force majeure or unforeseen circumstances has little or no chance of success. 

Hard to predict 

It is difficult to predict how an invocation of force majeure or unforeseen circumstances will turn out. It depends on when it takes place, whether you could have foreseen the situation, the circumstances of the case come into play and how many parties were involved. So it is not a foregone conclusion. COVID-19 and government measures obviously do not constitute, in and of themselves, force majeure or unforeseen circumstances, and the same is true of a war. But the more drastic the government's measures are, the more chances you have. 

Check the terms and conditions 

If you want to avoid discussions about force majeure and going to court, make sure to get your terms and conditions right. If you check and update your terms and conditions, you will be well prepared for future events. 

Force majeure clause 

Include a force majeure clause in your general terms and conditions that clearly defines what force majeure is, when you can invoke it, and its contractual consequences. In any case, stipulate that a virus, an epidemic, or sudden war can give rise to force majeure. That will prevent awkward discussions afterwards. 

The correct formulation 

How a force majeure clause can best be formulated will vary from one business to another. Consult your trade association or a lawyer for more information on this. 

Reasonable conditions 

There are legal rules governing general terms and conditions. For example, they must not be unreasonable. And they cannot be changed just like that partway through an assignment. Read more about the use of terms and conditions

Obligation to provide information 

Also, send the terms at the beginning of negotiations to ensure your customer is aware of what your terms and conditions say before you close the deal. You might send them with the offer or hand them over personally, for instance. If your customer was not aware of your terms and conditions beforehand, they do not apply. 

Help 

Do you have questions on agreements, and are you having a hard time figuring things out? Just get in touch with the Netherlands Chamber of Commerce KVK. Together, we can explore your situation and see how we can help you along.