Essential Terminology for the Auto Transport Industry

What is Force Majeure?

Force majeure is a French word that can be translated to mean 'superior force.' It is a legal principle springing from civil law tradition that relieves contracting parties from performing their contractual obligations when events that a contracting party could not control prevent the fulfillment of contractual duty. They happen rarely and in situations beyond the control of, and the expectation of, the parties involved.

Understanding Force Majeure Events

Force majeure events encompass a broad spectrum of circumstances, including but not limited to:

• Natural disasters: Earthquakes, hurricanes, floods, cold waves, and others.
• War, terrorism, and civil unrest: War, acts of terrorism, and civil unrest.
• Government actions: Internationalization risks, including embargoes, trade restrictions, and changes of law affecting the contract's performance.
• Labor disputes: Brawls, go-slows, stoppages, boycotts, strikes, lockouts, and any other stoppage of business activities.
• Pandemics and epidemics: Pandemics of infectious diseases that affect business operations.

However, it should be remembered that some events are recognized as force majeure and can be different for each contract or country.

The Role of Force Majeure Clauses

The contracts usually incorporate legal excuses to identify the parties' obligations in such an event. These clauses often specify:

• Events covered: The kinds of occurrences referred to as force majeure.
• Obligations affected: The degree to which contract breach is justified or the contract performance is relieved.
• Notice requirements: The measures to be implemented when communicating a force majeure circumstance to the other party.
• Duration of relief: The fact about the duration for which the force majeure event is likely to affect the performance of the contract.

Further, introducing force majeure clauses within the contract means that the risks likely posed by other events are well handled and that a straightforward course of action needs to be taken in case of disruption.

Limitations and Considerations

Nevertheless, before entering force majeure clauses, parties want to know their limits. Force majeure does not include all events that were not foreseen, and often, the burden lies on the shoulders of the party that wants to undertake the force majeure clause. Moreover, force majeure provisions seldom relieve a party from fulfilling duties that were expected right from the event's occurrence.

Preparing the force majeure clauses is compassionate, so the provisions should be unambiguous to mitigate such a situation. Legal advice is not a luxury but a necessity when developing force majeure provisions for businesses since it can address the specific nature of each company.

Are there particular real-world examples you would like to go through regarding force majeure in the transport sector, or would you prefer to look at the effect of force majeure in the context of contracting?