Publication date: 26.06.2024
Force majeure in contracts: how the war affects the fulfillment of obligations
Introduction
Force majeure (or "force majeure") plays an important role in contractual relations, providing the parties with the opportunity to protect their interests in the event of unforeseen events that make the fulfillment of obligations impossible or extremely difficult. One such circumstance is war, which can have a significant impact on the performance of contracts and force the parties to revise their agreements.
Definition of force majeure
Force majeure is generally defined as events that:
- They are unpredictable and inevitable.
- Are beyond the control of the parties to the contract.
- Make it impossible or significantly complicate the fulfillment of contractual obligations.
Such circumstances may include natural disasters (earthquakes, floods), man-made disasters, epidemics, and war.
The war
Impact on fulfillment of obligations
War can affect the fulfillment of contractual obligations in several ways:
Physical destruction or damage to property:
- Military actions may result in the destruction of production facilities, warehouses, transportation, etc., making it impossible to fulfill obligations to supply goods or provide services.
Changes in legislation and regulatory conditions:
- Martial law is often accompanied by changes in legislation, restrictions on the movement of goods, currency restrictions, and mobilization of labor resources, which affects the ability to fulfill contracts.
Disruption of logistics chains:
- Military operations can affect transportation networks, making it difficult or impossible to deliver goods under contracts.
Risks to personnel:
- The safety of employees may be jeopardized, leading to a halt in production or service delivery.
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Legal aspects
Including force majeure in contracts:
- The parties to a contract may stipulate the possibility of force majeure, including war, in the text of the contract in advance. This makes it possible to clearly define which events are recognized as force majeure and what consequences they will have on the fulfillment of obligations.
Notification of force majeure:
- Contracts usually contain provisions requiring a party that cannot fulfill its obligations due to force majeure to notify the other party within a certain period of time. This allows the parties to respond to the situation in a timely manner and take appropriate measures.
Consequences of force majeure:
- Force majeure may result in a temporary release of the parties from their obligations, a postponement of performance or termination of the contract without penalty. The specific consequences depend on the terms of the contract and applicable law.
Examples and precedents
International contracts:
- International contracts often recognize war as a force majeure event. For example, international trade contracts often refer to the International Chamber of Commerce's provision that includes war in the list of force majeure circumstances.
- National legislation:
- In different countries, legislation may interpret force majeure in different ways. For example, in France, articles of the Civil Code provide for exemption from liability in the event of force majeure, including war. In Ukraine, there are also relevant provisions in the Civil Code and other regulations governing force majeure.
Recommendations for contracting parties
Clear definition of force majeure in the contract:
- The inclusion of clear force majeure provisions in the contract helps to avoid misunderstandings and conflicts. It is necessary to define in detail what events are considered force majeure, what notification procedures must be followed, and what consequences will occur for the parties.
Regular review of contract terms and conditions:
- In today's world, where political and economic conditions can change rapidly, it is important to regularly review contract terms and conditions and make necessary changes to account for new risks.
Risk insurance:
- Commercial enterprises may consider insuring risks related to force majeure. This may include property, liability, business interruption, etc.
Alternative methods of dispute resolution:
- Including mediation or arbitration provisions in the contract to resolve disputes arising from force majeure can help the parties resolve conflicts more quickly and efficiently.
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Conclusion.
Force majeure events, such as war, can have a significant impact on the fulfillment of contractual obligations, making it difficult or impossible to fulfill them. The inclusion of clear force majeure clauses in contracts, regular review of contractual terms, risk insurance and the use of alternative dispute resolution methods can help the parties to respond effectively to such unforeseen events. Proper consideration of force majeure when entering into contracts will help protect the interests of the parties and reduce the risks associated with their performance in emergency situations.
