Force majeure clauses - unfair, unreasonable?

But here’s the crux of the problem.  Although the force majeure clause has been around since the end of the Code Napoleon of France²– no one has ever clearly defined how force majeure clauses apply to government contracts.

One result of this is the lack of agreement over how force majeure clauses are applied on a government contract and has become the conundrum for years. Plus, the lack of current literature addressing force majeure clauses in government contracts and the lack of mandatory techniques for force majeure in government contracts – makes this hazardous for both government and contractors, because this clause is not consistently being applied. The solution is to start using a force majeure clause.  It will assist contracting officers in dealing with unforeseen events in contracts and will add a variety of policy benefits surrounding the construction of the Federal Acquisition Regulation (FAR).

FAR 2.101 confirms on Acquisitions.gov -- an official website of the United States Government -- that there is no definition of force majeure. An excerpt of FAR 2.101(a) adds “A word or a term, defined in this section, has the same meaning throughout this regulation.”³

So, obviously, since the FAR does not define force majeure, how does force majeure impact acquisitions practice?

Force Majeure clauses and drafting

A lack of definition in the FAR begs the question: how then should force majeure clauses be drafted?

Rather than relying on general terms, such as Act of God, the National Law Review recommends using express terms such as “epidemics.” For instance, if you are contracting in an area prone to hurricanes you want to include the specific term hurricane in your force majeure clause.

According to contracts scholar, Professor Williston, economic hardship alone does not qualify for force majeure clauses⁴. This means that if the price of steel suddenly increases and you want to invoke force majeure, you are out of luck. Also, if you entered a contract during the COVID-19 pandemic, or a hurricane, etc., force majeure cannot be invoked because the “risk was foreseeable at the inception⁵” of the contract.

Economic hardship and other circumstances not constituting force majeure clauses should also be included in force majeure clauses. Also, clarifying which common law contract principles and UCC provisions apply specific to your jurisdiction, will also help to establish uniformity for drafting force majeure clauses.

Force Majeure clause

At this point, we have no resolution that fits all purposes, and this looks like a problem.  Is it?  Even without documentation on a force majeure clause we still have rationale for having a force majeure clause based on policy goals of the FAR.

So far, so good, but a policy goal of the FAR is uniformity. Which means contractors cannot use force majeure clauses just because FAR 12.403(d)(i)(B)(ii) only includes the word “may” rather than “shall” which the Supreme Court had defined as “discretionary” in Kingdomware Technologies v. United States. In other words, a contractor using the force majeure clause does not risk a court not upholding the clause simply because the word “shall” appears in the clause. 

The drafters of the FAR required “coordination, simplicity and uniformity in the Federal acquisition process.” Requiring force majeure in all cases of government contracting furthers this goal. The opposite would result in different interpretations and contradictory results would occur far too often.

Conclusion

On a government contract, the lack of agreement on the application of force majeure clauses is an obvious problem. The lack of current literature addressing force majeure clauses in government contracts plus the lack of mandatory techniques for force majeure in government contracts – makes this a real concern for both government and contractors because it is not consistently being applied.

I propose using a force majeure clause. It will assist contracting officers in dealing with unforeseen events in contracts and add a variety of policy benefits surrounding the construction of the FAR.

Force majeure clause should be incorporated into all commercial contracts, including both domestic and foreign contracts, as either a class or individual FAR deviation on contracts and modifications undertaken on or after publication of this article. This will allow for the opportunity for contracts containing this clause to be tried in the Armed Services Board of Contracting Appeals, Civilian Board of Contracting Appeals, and or other courts as appropriate.  Also, by incorporating the force majeure clause into contracts, contractors and government will understand how to end contracts based on the circumstances which incentivizes them to do business with the government.

END NOTES

1. Legal Information Institute’s report titled force majeure
2. Napoleonic Code Wikipedia definition
3. American Bar Association. (2022). Force Majeure – History, Understanding, and Early Applications. May 19, 2022.
4. Supreme Court of the United States. (October Term, 2015). Kingdomware Technologies, Inc. v. United States. Retrieved December 20, 2019, from https://www.supremecourt.gov/opinions/15pdf/14-916_6j37.pdf
5. Contract Performance during COVID-19. Colorado Lawyer. May 20, 2022.

ABOUT THE AUTHOR

Greg Tharp has 20 years of experience as a librarian. He served as a member of the State of Connecticut Library Advisory Council on Library Planning and Development, is a member of the American Library Association, Massachusetts Library Association, ARMA International, IACCM, American Bar Association, Massachusetts Bar Association, and the Boston Bar Association.

Tharp holds a Paralegal Certificate from Boston University, a Master’s Certificate in Acquisitions and Contract Management from American Graduate University, an Advanced Certificate in Archives Management from Simmons University, a Master of Library Science from Southern Connecticut State University, and a Bachelor of Science from Sacred Heart University where he was elected to Phi Eta Sigma and received the Passion for Learning Award. Tharp also holds a Certificate of Professional Librarianship from the Commonwealth of Massachusetts Board of Library Commissioners and is a Second Degree Black Belt in Tang Soo Mi Guk Kwan.

Additionally, he received acquisitions training at Defense Acquisitions University, Federal Acquisitions Institute, and the University of Virginia. He also received human resources training at HR University and legal training at New England Law Boston.

Tharp has authored journal articles on commercial government contracts in the Contracting Excellence Journal and has presented on commercial government contracts at the Naval Postgraduate School Acquisition Research Symposium and has written a book on commercial government contracts published with Elivia Publishing. He has also co-authored an article on Chinese academic libraries in the Library Hi Tech journal and has presented on virtual reality in academic libraries at the Library Research Seminar VII.