Force majeure is a provision in a contract that frees both parties from obligation if an extraordinary event directly prevents one or both parties from performing. A non-performing party may use a force majeure clause as excuse for non-performance for circumstances beyond the party's control and not due to any fault or negligence by the non-performing party. However, mere impracticality or unanticipated difficulty is not enough to excuse performance. Indeed, courts generally do not recognize economic downturn as a force majeure event. This is because economic hardships occur regularly in business, and as a result, may be appropriately and preemptively dealt with by allocating its risk through the terms of the contract. As such, force majeure events are often labeled as "acts of god" and include both natural and man-made events like fires, floods, storms, war, and labor disputes.
Some jurisdictions, like New York, interpret force majeure clauses narrowly and only grant excuses if the specific event is stated in the clause. As such, parties may agree to broaden or narrow the terms and conditions of performance. Still, when interpreting force majeure clauses, courts interpret them based on the parties' circumstances and refuse to enforce overtly broad force majeure clauses. For example, New York courts have recognized the COVID-19 pandemic and the resulting bar on non-essential business activity as a sufficient force majeure event to excuse performance where the term "natural disaster" was expressly stated as a circumstance that would trigger the clause. On the other hand, courts have refused to extend force majeure clauses (even those related to COVID-19-related hardships) where the underlying clause was written to cover any unforeseen or uncontrollable change, and where there was doubt to whether the event (as opposed to economic considerations) directly prohibited the non-performing party's nonperformance (see, e.g, Rudolph v. United Airlines Holdings, Inc. 519 F.Supp.3d 428).
Lastly, force majeure clauses are among a number of defenses that can be asserted in response to an action for nonperformance, such as the general defense of impossibility and frustration of purpose.
[Last updated in December of 2021 by the Wex Definitions Team]