Force majeure clauses appear in nearly every commercial contract — tucked into the boilerplate, rarely negotiated, and almost never read until the moment they matter most. When an extraordinary event disrupts normal business operations and one party can no longer perform as agreed, force majeure becomes the center of an urgent legal question: does this clause apply, and what are the consequences if it does?
This article examines how force majeure clauses work, how major commercial states interpret them, and what options exist when a contract lacks one entirely.
The Basics of Force Majeure
Force majeure has its roots in French civil law — the term translates roughly to “superior force.” Historically, these clauses were designed to excuse contract performance when the parties encountered circumstances so extraordinary and unforeseeable that continuing to perform was either impossible or fundamentally contrary to the purpose of the agreement.
Typical triggering events have included natural disasters, wars, labor strikes, government actions, and major catastrophes. Whether a given event qualifies depends on the specific language of the clause and the jurisdiction’s interpretation of that language.
Three elements are generally required for a force majeure clause to operate:
- Unforeseeability. The triggering event could not have been reasonably anticipated by the contracting parties at the time the agreement was made.
- Lack of control. The event was entirely outside the affected party’s ability to prevent, cause, or manage.
- Impact on performance. The event renders performance under the contract impossible or commercially impracticable.
Beyond these baseline requirements, the breadth of any force majeure clause depends on how it was negotiated. A narrowly drafted clause may only excuse performance in the event of specific listed occurrences. A broadly drafted clause may cover any event meeting the general criteria above, regardless of whether it appears on an enumerated list.
How Key Commercial States Interpret Force Majeure
Because contract law is primarily state law, the analysis differs depending on where the contract was made and where performance is to occur. The following is a summary of how several high-volume commercial jurisdictions approach force majeure.
New York
New York courts begin by examining whether the specific event at issue is listed in the force majeure clause. If the clause enumerates “epidemics,” “pandemics,” or similar events, the party seeking to invoke the clause has a significantly stronger foundation (see, e.g., Philbro Energy, Inc. v. Empresa De Polimeros De Sines Sarl, 720 F. Supp. 312 (S.D.N.Y. 1989)).
Even absent a specific enumeration, government-ordered shutdowns or restrictions may qualify under a clause covering acts of governmental authority, depending on how broadly the clause is drafted and the scope of the government action involved.
New York also requires that the force majeure event be genuinely unforeseen and that the party seeking to invoke the clause must have attempted to perform despite the disrupting event. Contracts entered into after widespread knowledge of a particular risk are less likely to benefit from force majeure protection on that basis (see id. at 318).
Texas
Texas takes a notably different approach. Courts there do not require that the force majeure event be unforeseeable as a prerequisite to invoking the clause. As stated in Perlman v. Pioneer Ltd., 918 F.2d 1244, 1248 (5th Cir. 1990): “Because the clause labeled ‘force majeure’ in the lease does not mandate that the force majeure event be unforeseeable or beyond the control of Perlman before performance is excused, the district court erred when it supplied those terms as a rule of law.” Whether unforeseeability is required depends entirely on the contract language, not on any default legal rule.
Florida
Florida applies strict requirements. A party seeking to invoke force majeure must demonstrate both that the event was unforeseeable and that it was outside the party’s control. (See Florida Power Corp. v. City of Tallahassee, 18 So.2d 671, 675 (Fla. 1944).) Courts in Florida are not inclined to excuse performance based on increased cost or inconvenience alone.
California
California’s standard is multifactorial and fact-specific. Force majeure is not limited to acts of God, but the test is whether, under the particular circumstances, there was an interference with performance that the affected party could not have prevented through the exercise of prudence, diligence, and care. (See Mathes v. City of Long Beach, 121 Cal. App. 2d 473, 477 (2nd Dist. 1953).)
Critically, California courts have held that a higher cost of performance, standing alone, does not excuse non-performance. Relief is available only where the difficulty, expense, injury, or loss is extreme and unreasonable. (See Butler v. Nepple, 54 Cal. 2d 589, 598 (Cal. 1960), affirming a judgment where higher drilling costs did not excuse performance under a lease.)
Illinois
Illinois courts tend to fall between New York’s relative flexibility and Florida’s strictness. The enforceability of force majeure clauses depends heavily on the contract language and the specific facts of each case, with courts evaluating whether the parties actually negotiated the allocation of the particular risk at issue.
The Takeaway Across Jurisdictions
New York tends to be more permissive in its analysis; Florida and California apply stricter standards; Texas largely leaves the question to the contract itself; Illinois falls in between. In all cases, the threshold question is what the contract actually says. Parties with clearly drafted force majeure clauses have a stronger starting position in any jurisdiction. Parties whose contracts are silent or ambiguous face a much harder road.
For parties that entered into a contract before a known risk materialized, the force majeure argument is substantially stronger. For those who signed after the risk was widely known, courts in many jurisdictions will treat that risk as having been foreseeable — and therefore not excused by force majeure.
What Happens When There Is No Force Majeure Clause?
A contract without a force majeure clause is not necessarily without any safety valve for extraordinary circumstances. Two common-law doctrines may provide relief when a force majeure clause is absent.
Impossibility and Impracticability
The Uniform Commercial Code, which most states have adopted in some form, provides that a seller is excused from performance when that performance “has been made impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable governmental regulation.” (UCC § 2-615(a).)
The Second Restatement of Contracts similarly defines impossibility broadly, as “not only strict impossibility but impracticability because of extreme or unreasonable difficulty, expense, injury or loss involved.” (Second Restatement of Contracts § 261.)
These doctrines provide a potential path for parties who cannot perform due to government-mandated restrictions, supply chain failures, or other extraordinary disruptions — even in the absence of a specific clause. However, courts generally apply these defenses narrowly. A pure economic argument — that performance has simply become more expensive — typically will not suffice.
Frustration of Purpose
A related doctrine, frustration of purpose, may excuse performance where an event has so fundamentally undermined the purpose of a contract that it would be unjust to hold the parties to their obligations. This doctrine requires that the frustrating event be unforeseeable, that the frustration be substantial, and that the non-occurrence of the event was a basic assumption of the contract at formation.
Practical Guidance for Drafting and Reviewing Force Majeure Clauses
Force majeure clauses should not be treated as boilerplate. Parties negotiating commercial contracts, loan documents, or real estate agreements should consider the following:
- List specific events. Rather than relying on general language, enumerate the categories of events the parties intend to cover, including government-ordered shutdowns, disease outbreaks, infrastructure failures, and supply chain disruptions.
- Define “impossibility” vs. “impracticability.” Clarify whether the clause applies only when performance is literally impossible or also when performance is commercially impracticable.
- Specify notice requirements. Most well-drafted clauses require the party seeking to invoke force majeure to provide written notice within a defined period after the triggering event.
- Address duration and termination. Define how long the force majeure period can last and what happens if the event continues beyond a specified time — including whether either party has the right to terminate the contract.
- Allocate risk. Consider whether price escalation, supply cost increases, or delay-related losses should be allocated between the parties even when force majeure applies.
Conclusion
Force majeure clauses exist precisely for moments when extraordinary circumstances disrupt normal commerce. But their usefulness depends entirely on how they are drafted — and on whether the jurisdiction’s default rules offer any protection when a clause is absent or ambiguous.
Lenders and real estate professionals should review their standard contracts with counsel to ensure that force majeure provisions are tailored to the risks their transactions actually face. A few paragraphs of careful drafting at the outset is far less costly than litigating the issue when performance breaks down.
For guidance on reviewing or drafting force majeure provisions, contact Geraci LLP at (949) 403-3488 or visit us at 90 Discovery, Irvine, CA 92618.
