What Is a Force Majeure Clause in Contracts?
Today, many personal and business activities are carried out through contracts. Drafting a contract requires careful attention to numerous details and can be complex. For this reason, consulting qualified professionals in contract drafting is often essential. One of the provisions frequently included in contracts is a force majeure clause, which may excuse performance or delay it.
Common Examples of Force Majeure in Contracts
The Meaning of Force Majeure
Force majeure is a contractual provision intended to release a party from liability when natural disasters or other unavoidable events occur that could not reasonably have been anticipated and that prevent the parties from performing their contractual obligations. The term force majeure is French and is commonly used to describe unpredictable events or events arising from human actions.
Examples of unpredictable events include floods, storms, and earthquakes. Examples of events linked to human actions include wars.
In general, force majeure refers to circumstances that are beyond a party’s control. Accordingly, the following situations are usually not considered force majeure:
- Where a party fails to perform its obligations despite being able to do so.
- Ordinary and expected natural events, which must be assessed in light of the circumstances.
The Force Majeure Clause in Contracts
The content of a force majeure clause and the governing law of the contract are matters that require careful attention. Force majeure is usually addressed in a specific clause, and the allocation of responsibility is therefore determined by the terms of the contract. Including a force majeure clause is particularly important in contract drafting,
especially for long-term agreements, because such a clause may release one party from its obligations or suspend performance for the duration of the impediment.
For this reason, sound contract drafting principles are essential. It should also be noted that the interpretation of force majeure events can lead to disputes between the parties.
Examples of Force Majeure in Contract Practice
The concept of force majeure is interpreted differently across legal systems. For this reason, various internationally recognized definitions and approaches have been developed.
In some legal systems, force majeure is limited to so-called acts of God, such as floods, storms, earthquakes, and similar natural events. In these systems, human or technical failures, such as terrorist acts, acts of war, communications system interruptions, or power outages, may not be treated as force majeure.
One important issue when drafting a contract is distinguishing between acts of God and other forms of force majeure. Where an event is included within the force majeure clause, and it prevents performance of the contract, the remaining option for the parties may, in certain cases, be termination of the contract.
Force Majeure Under Iranian Law
Under Article 227 of the Iranian Civil Code, a person who fails to perform a contractual obligation may be ordered to pay damages unless that person proves that the non-performance resulted from an external cause. In addition, under Article 229 of the Iranian Civil Code, if non-performance is due to an incident beyond the person’s power to prevent, that person is not liable for damages.
In Iranian legal terminology, this concept is commonly referred to as quwwat-e qahereh (overriding force). Such an overriding force is understood, in line with Article 227, as an external event that cannot be prevented.
Therefore, where negligence or insufficient knowledge causes a party to be unable to foresee a particular event, that situation is not treated as an overriding force.
In some cases, the cause of force majeure may arise from barriers imposed by the government or created by legislation or judicial orders. The event must be external and unavoidable.
In recent years, numerous sanctions have been imposed against Iran. If sanctions render performance of a contract impossible, they may be treated as an instance of overriding force, provided that the sanctions were not reasonably foreseeable at the time the contract was concluded.
The element of unforeseeability is essential. If, at the time of contracting, the parties could anticipate that sanctions were likely to occur or were already developing, that situation would generally not qualify as an overriding force.
Frequently Asked Questions About Force Majeure Clauses
Force majeure, also referred to as overriding force, means unforeseeable and unavoidable events that prevent performance of contractual obligations, such as earthquakes, floods, war, or unexpected sanctions.
If a party is able to perform but does not do so, this is not a force majeure. It is a breach resulting from the party’s own fault or negligence.
No. In some cases, force majeure suspends performance, and obligations resume once the impediment is removed. If the impediment is permanent, the contract may be terminated or may cease to be enforceable, depending on the contract terms and applicable law.
Under Iranian law, natural disasters such as earthquakes and floods, war, revolution, unexpected sanctions, and legal or governmental barriers are among the most common examples.
Under Articles 227 and 229 of the Iranian Civil Code, if a person proves that non-performance was caused by external and unforeseeable events beyond their control, they may be exempt from paying damages.
They can be, if they are imposed after the contract is concluded and they make performance impossible, and if they were not reasonably foreseeable at the time of contracting. If sanctions were foreseeable, they generally do not fall within the scope of force majeure. What does force majeure mean in contracts?
What is the difference between force majeure and failure to perform?
Does force majeure always lead to termination of the contract?
What are common examples of force majeure in Iran?
What do Iranian laws say about force majeure?
Are sanctions considered force majeure?
