In contracts, one of the most common ways of limiting a party’s vulnerability to liability is the use of a Force Majeure clause – ‘contract provisions that excuse a party’s nonperformance when “acts of God” or other extraordinary events prevent a party from fulfilling its contractual obligations’.
But what is Force Majeure as a concept? The strength of Force Majeure clauses was seriously tested in the wake of the Covid-19 pandemic that led to a worldwide rash of contractual disputes, Nigeria not being an exception.
This article will be looking at Force Majeure contractual clauses in-depth, with a focus on the topics of :-
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– The definition of Force Majeure.
– A comparative analysis of Force Majeure, Acts of God, and Frustration.
– Limitations of Force Majeure clauses.
What is a “Force Majeure” exactly?
“Force Majeure” is a term used to describe any unavoidable event beyond the reasonable control of a contracting party leading to an inability to furnish consideration under the terms of a contract regardless of the reasonable care applied by that party.
To classify as Force Majeure, an event has to be :
– Unforeseen.
– Unavoidable.
– External in nature (unconnected to either of the parties to a contract).
A Force Majeure event can be described interchangeably as an Act of God as a result of occurring beyond the scope of the reasonable contemplation of all contracting parties, but not in all circumstances.
What then is Frustration under Contract laws in Nigeria?
Frustration is a contract law concept used in Common Law jurisdictions like Nigeria and England and it is defined as an occurrence which makes the contract physically or commercially impossible to perform or make, in this case radically different from what was contemplated at the time the contract was entered into.
What are strict examples of Force Majeure events?
Some of the events that would classify as Force Majeure include the following:-
– War .
– Strikes or protests.
– Crime.
– Epidemics.
– Sudden legal changes/voiding legislation.
What are the examples of events that cannot classify as Force Majeure events under Nigerian Contract laws?
Force Majeure events will not apply to or include events within the scope of reasonable contemplation and control of a contracting party such as :-
– An event resulting from the negligence or malfeasance of a party having a negative effect on the ability of such a party to perform its obligations under a contract.
– Particularly anticipated occurrences expressly mentioned in a contract e.g slower work paces during rainy seasons or gas flaring .
– Any resulting event qualifying as the usual and/or natural effect of external forces e.g predictable bad weather.
Do Force Majeure clauses automatically eliminate obligations due under a contract?
No, they do not. They only suspend contractual obligations for as long as Force Majeure events last.