- Force Majeure: How It Affects Contracts in the Aftermath of the Flood
- September 9, 2016 | Author: Kelsey A. Clark
- Law Firm: Breazeale, Sachse & Wilson, L.L.P. - Baton Rouge Office
- Louisiana law applies the concept of “force majeure” or “act of God” in the context of a fortuitous event that renders performance on a contract impossible. A fortuitous event is one that, at the time a contract was made, could not have been reasonably foreseen. Civil Code Article 1876 provides that an obligor cannot be held liable for his failure to perform on a contract when that failure to perform is caused by a fortuitous event that makes performance impossible. For example, if a party contracts with another to provide materials for the construction of a building, and subsequently all of their inventory is destroyed in a fire, performance would become impossible because the materials are no longer in existence. Thus, under Louisiana law, the supplier would not be liable for his failure to perform because doing so would be impossible.
Though Louisiana law provides this safety net for obligors, it is not absolute. While some contracts may be rendered impossible by the occurrence of an event that causes damage that was not expected and that could not have been anticipated, there are still limits on this right. If an obligor can perform, though it may be more economically difficult or burdensome than initially expected, it will likely not be considered “impossible” under the Civil Code such that the obligation to perform is nullified. In short, just because it is more difficult to perform does not mean that it is impossible to perform. Where it is simply more difficult, the obligation to perform likely persists in the wake of an unexpected event.
Furthermore, not all contracts are treated equally. Each document will stand on its own terms and conditions, and ultimately it is those terms that will govern its application. Some contracts may include “force majeure clauses” which will dictate how those types of events should be handled by the parties. Additionally, some of those provisions require that notice be given, or that other procedural steps be taken in order to take advantage of the protections afforded to the parties.
In the aftermath of the historic flooding that has struck south Louisiana, it is important to keep these principles in mind. It is certainly possible that pre-flood contracts are now impossible to perform due to damage that has been sustained. However, it is also possible that performance is not going to be considered “impossible,” but rather more difficult. In that instance, the obligation to perform will likely persist. Finally, it is critical that you begin reviewing all pre-flood contracts to determine whether there are any particular notice and/or triggering provisions contained therein so that you are able to take advantage of any protections provided by the contract.