What is force majeure? Mississauga, Ontario lawyer explains why this term matters during COVID-19 and beyond
Our neighbours to the east will likely immediately recognize the words “force majeure.” This French term literally means, “greater force.” And this term is increasingly making the rounds due to its relationship to and implications for business owners within the COVID-19 environment. As a business and real estate lawyer in Mississauga, ON, Tarunjeet Gujral is well-versed in force majeure as an accepted standard within the legal code, and answers your timely FAQs related to this clause.
What is force majeure exactly?
As its French definition suggests, force majeure generally refers to the concept of an “Act of God.” We often hear about this concept when dealing with property casualty insurance; for instance, your homeowner’s or auto policy likely has language within it related to damage caused by Acts of God – such as a fire that is caused by a lightning strike. To take this definition a few steps further, force majeure refers to those accidents or events that result from “natural” causes (not human-related intervention), and those incidents which could not have been prevented with so-called “reasonable” actions and foresight. Piggybacking off our above example, force majeure is the difference between a lightning strike and faulty wiring as the cause of a destructive blaze.
How does force majeure relate to my business?
Within your contract, you may have signed a force majeure clause. Depending on the specific language within that clause, you may be compelled to continue to fulfill your obligations as outlined in the contract – even in the face of a closure caused by an “Act of God.” This may mean, for instance, that you must continue to pay a vendor or other partnering party for goods and services after closing your business due to economic hardship caused by the pandemic. Be aware that, for the contract’s stipulations to remain enforceable, the clause must be included in the initial contract and signed by you. Be aware that force majeure may be interpreted in different light before, during and after the pandemic by the courts.
Can force majeure be refused?
This gets to be a slippery slope. Be aware that we are talking in generalisations here. But, in the fall-out of COVID-19, there have been numerous cases of differing interpretations related to the force majeure clause. The incidents that are “covered” as “Acts of God” within the clause may include weather-related events such as storms; however, they may not have any verbiage related to pandemics, epidemics, or their ilk. This is changing; more contracts are including pandemics and related events as separate clauses. Depending on the language of your contract, the force majeure conditions in your contract can either work in your favour, or work in the favour of the other party (such as a landlord in a commercial property owner-tenant relationship).
We are well-versed in the language of contracts and the language of the law. Bring your concerns to us. Schedule an appointment at our Mississauga office today.Back to Home Page