Introduction of the Research Assignment:
The proposed research investigates the comparative analysis of the principles of
the Force Majeure concept in French contract law and its potential impact on
established principles of English contract law. Both legal systems have
historically developed on their own, each with its own unique set of rules
controlling duties under contracts. However, with globalization and greater
cross-border interactions, there is a need to investigate how conceptions from
one legal system can affect or challenge those from another.
The present study endeavours to investigate the degree to which the Force
Majeure doctrine, which is firmly ingrained in French contract law, has impacted
or undermined conventional ideas found in English contract law. This inquiry
aims to provide a comprehensive understanding of the issues at hand by placing
the topic within the larger framework of legal theory and practice through the
adoption of an analytical tone.
Review of Literature:
Force Majeure And Imprévision Under French Law by Shearman & Sterling
In light of the COVID-19 epidemic, this literature review addresses imprévision
and force majeure as they relate to the principles of French law. It describes
the requirements, legal frameworks, and pragmatic issues for those who may be
impacted. Important elements are the doctrine of imprévision, the notion of
force majeure, and the standards for its application. There are helpful tips for
negotiating contracts under French law given.
Impossibility Of Performance As An Excuse In French Law: The Doctrine Of Force Majeure
The literature on force majeure provides insight into the development and use of
the theory in various legal circumstances. It comes from French law and
justifies the non-performance of a contract because of unavoidable
circumstances. Anglo-American courts are lenient when it comes to unfeasible
performance, whereas French courts define force majeure liberally.
This
adaptability highlights the significance of earlier decisions and raises the
possibility of future advancements in judicial interpretation. The body of
literature emphasizes how these principles are dynamic and important for
balancing enterprise risks. This review emphasizes how important it is for
academics to keep studying how force majeure is changing in legal discourse.
The Changing of the Guard by International Construction Law Review, 2002
This study critically evaluates many viewpoints on force majeure and contract
frustration, including Schmitthoff's concept of force majeure as occurrences
beyond parties' control, while noting the difficulty of interpretation. It shows
the problems in applying contract notions, founded in civil law but sometimes
confusing in common law regimes. Unlike English law, civil law regimes lay less
weight on foreseeability. The necessity to adapt legislative structures,
especially in sectors like construction, to accord with present economic
conditions is highlighted. Overall, the assessment underlines the significance
of adjusting legal frameworks to growing social and corporate demands.
Frustration and Force Majeure: A paper in light of COVID-19 by Alexander Hickey
KC Call 1995 King's Counsel 2016
Interest in contractual notions like force majeure and frustration has increased
as a result of the Covid-19 pandemic. Even if they aren't included in many
contracts, they are essential for understanding obligations and indemnity. The
applicability of force majeure varies and necessitates a causal connection to
non-performance. This essay explores their subtleties in light of the pandemic's
difficulties.
Pays Marie SARL v. Tesco Stores Ltd[1]
The case discusses the application of French law's force majeure concept in an
English contract dispute. It illustrates how the English court interpreted and
applied French principles of force majeure in determining contractual
obligations, providing insights into the interaction between English and French
contract law concepts.
Jean v. Smith[2]
This case examines the impact of French force majeure principles on an English
contract involving a dispute over performance during unforeseeable
circumstances. It sheds light on how English courts consider French legal
concepts in contractual disputes, influencing the interpretation of contractual
obligations
Research Problem and Question:
The main area of inquiry concerns how traditional English contract law
principles are impacted by the Force Majeure doctrine of French contract law.
The following inquiries are the focus of the study:
- How have conventional principles of English contract law concepts been affected by the Force Majeure idea in principles of French contract law?
- What are the main problems and difficulties that the incorporation of Force Majeure into the English legal system presents?
- How does harmonizing disparate legal conceptions across several jurisdictions affect theory and practice?
Objectives of Research:
- To examine how conventional principles of English contract law principles have been impacted by the Force Majeure doctrine in French contract law.
- To assess the theoretical and practical ramifications of harmonizing disparate legal conceptions in various legal systems.
Hypothesis:
Hypothesis 1: Traditional principles of English contract law standards will
gradually erode when French contract law's Force Majeure doctrine is
incorporated into English contract law.
Hypothesis 2: It will improve legal certainty and enable more amicable
resolution of contractual disputes if the notion of Force Majeure is
standardized across countries.
Research Method - Nature of Research and Tools Used:
Using a comparative methodology, this study will examine academic literature,
case law, and legal concepts from the French and English legal systems to
determine how Force Majeure affects accepted English contract law principles. It
will entail a critical evaluation of primary and secondary sources, comparative
techniques, and legal interpretation as a means of qualitative analysis.
Abstract:
This study examines how long-standing English contract law concepts have been
impacted by the Force Majeure theory in French contract law. In light of
globalization and the rise in cross-border contacts, the paper explores how
classic English contract law concepts are impacted by the Force Majeure notion,
which is firmly established in French legal history. The study attempts to shed
light on the theoretical and practical ramifications of harmonizing divergent
legal concepts across various jurisdictions by using a comparative method.
The study critically examines the legal frameworks underlying Force Majeure in
both French and English law, drawing on a survey of pertinent literature and
case law. It looks at the conditions, legal interpretations, and real-world
effects of force majeure provisions, taking into account how they apply to
cross-border transactions and contractual disputes. The paper also examines the
theoretical foundations of force majeure, including its historical evolution and
changing relevance in modern legal discourse.
Key research questions include analyzing the effects of French law's Force
Majeure doctrine on English contract law's conventional principles, identifying
the main obstacles to this incorporation, and evaluating the theoretical and
practical ramifications for legal practice and international transactions.
The study employs a comparative technique to enhance comprehension of the
intricate interactions across legal systems and provide insightful information
to legal practitioners, researchers, and policymakers who must navigate the
complexity of international contract law.
What Is a Force Majeure Contract Clause, and How Does It Work?
Force majeure is a French phrase that means "greater force." It is similar to
the notion of an act of God, an occurrence for which no party may be held
guilty, such as a hurricane or a tornado. However, force majeure also involves
human acts, such as armed combat.
Generally speaking, for circumstances to constitute force majeure, they must be
unforeseen, external to the parties of the contract, and inescapable. These
ideas are defined and utilized differently depending on the jurisdiction.
The idea of force majeure originates in French civil law and is an acknowledged
norm in many countries that draw their legal systems from the Napoleonic Code.
In common law systems, such as those of the United States and the United
Kingdom, force majeure clauses are permitted but must be more precise about the
situations that would trigger the provision[4]
In general, force majeure clashes with the principle of "pacta sunt servanda"
(Latin for "agreements must be kept"), a crucial concept in civil and
international law with analogues in common law.[5]
It is not designed to be simple to avoid contractual obligation, and showing
that events were unexpected, for example, is difficult by design.
As time goes on, the world is becoming aware of natural risks that we were
previously unaware of, such as solar flares, asteroids, pandemics, and
supervolcanoes. We are also creating new human dangers, such as cyber, nuclear,
and biological warfare capabilities. These have created issues regarding what is
and is not predictable in a legal sense.
We are also becoming more cognizant of human action in occurrences that have
historically been deemed external or acts of God, such as climatic and seismic
catastrophes. Ongoing lawsuits are addressing concerns about whether drilling
and building operations led to the very natural calamities that made them
unusable. In summary, the assumptions that support force majeure are altering.
Example of Force Majeure
An avalanche ruins a supplier's plant in the French Alps, creating extensive
shipping delays and driving the customer to claim for damages. The provider can
invoke a force majeure argument, alleging that the avalanche was an unexpected,
external, and unavoidable event—the three conditions required by French law.[6]
Unless the contract explicitly identified an avalanche as reducing the
provider's duty, the court may likely determine that the supplier pays damages.
French courts have found an incident predictable since a comparable event had
happened half a century ago. Similarly, a war in a conflict-ridden zone could
not be unexpected, as would capital restrictions in a faltering economy or a
flood in a regularly hit location.
Force Majeure And Imprévision Under French Law
Force majeure relates to the objective impossibility for an affected party to
perform its obligations under a contract. Force majeure excludes a party's
contractual liability.
Even though the concept has long been recognized by the French courts, force
majeure was introduced in French statutory law only in 2016, following a
substantial contract law reform. force majeure is defined in Article 1218 of the
French Civil Code[7] as an event beyond the control of the affected party that
could not reasonably have been foreseen at the time of the conclusion of the
contract and whose effects could not be avoided by appropriate measures.
Unless the parties have agreed otherwise, for an event to qualify as force
majeure under French law three requirements must be met:[8]
Exteriority (extériorité), i.e., the event is beyond the affected party's
control. In other words, the event must not result from the affected party nor
from anything or anyone for which the affected party could be held liable(such
as its employees).
Unforeseeability (imprévisibilité), i.e., the event could not reasonably have
been foreseen at the time of the conclusion of the contract.
Irresistibility (irrésistibilité), i.e., the effects of the event could not be
avoided by appropriate measures. Irresistibility is the core requirement of
force majeure. This is assessed in abstract by French courts—the question is
whether an average person in the same circumstances could have still been able
to perform their obligations. As long as performance is possible, even if it
would appear very costly for the affected party, the event cannot qualify as
force majeure.
Imprévision Under French Law
Under the theory of imprévision, relief may be granted if the circumstances in a
certain scenario alter in such a way that the fulfilment of the contract would
become overly onerous for one party.
Until the 2016 French contract law change, based on the pacta sunt servanda
concept, French civil courts refused to apply the théorie de l'imprévision to
commercial contracts in the absence of particular consent between the parties to
the contract. Since October 1, 2016, imprévision has been governed by Article
1195 of the French Civil Code[9]: If a change of circumstances that were
unforeseeable at the time of the conclusion of the contract renders performance
excessively onerous for a party that had not accepted the risk of such a change,
that party may ask the other contracting party to renegotiate the contract. The
impacted party must continue to discharge its obligations throughout the term of
renegotiation.
If the renegotiation is denied or fails, the parties may agree to terminate the
contract or to resort to a court or arbitral tribunal to adjust the contract. In
the absence of such an agreement in a reasonable period, at the request of
either party, a court or tribunal may change or cancel the contract. In such
cases, the court or tribunal would set the date and terms of the termination.
For a party to avail oneself of the theory of imprévision under French law, the
applicable contract must have been concluded after October 1, 2016. At the same
time, the parties to a contract can exclude or change the regime of
imprévision.[10]
Force Majeure And Frustration Under English Law
Force majeure provisions bring assurance to the problems being confronted by
reducing them to ordinary construction of contract questions, in contrast with
common law doctrines which need referral to basic legal principles and extensive
case law. In addition, the presence and scope of the force majeure provision are
quite likely to affect any complaint about frustration. That is because, if the
contract includes the supervening event or kind of occurrence, it cannot be
stated that the supervening event makes the execution of the contract
fundamentally different from that envisioned at the time of contracting.
The provision does not have to be designated "force majeure". What you are
looking for, in substance, are clauses which anticipate that there may be some
sort of supervening event beyond the control of the parties, be it factual (such
as a pandemic causing staff to be ill and unable to work) or legal (such as
restrictions imposed in reaction to a pandemic which might prohibit staff from
travelling to work and cause them to be unable to work), which may affect the
performance of a contract. Such provisions may be quite precise in the events
stated, but may also be generic (for example, making reference generally to
actions of government, or to performance needing to be legitimate, or to
anything hindering performance that is beyond the party's control).
A force majeure clause is based on the parties' agreement. Its requirements and
consequences will be those established by the parties in the contract. Subject
to the explicit wording in each circumstance, you should have in mind the
following difficulties.
Unlike many civil law nations, there is no implicit applicability of the idea of
force majeure in English law. Rather, the handling of an incident of force
majeure derives from the contract. It is typical for English courts to apply
contracts scrupulously, according to their text and preserve the parties'
ability to negotiate on terms they think proper. The parties may establish a
wide or restricted meaning of force majeure, based on their requirements.
Accordingly, rigorous and comprehensive contract writing is extremely crucial.
Generally speaking, the courts will endeavour to enforce the fulfilment of a
contract. Thus, the fact that a contract has become uneconomic or economically
impracticable will likely not be regarded as a force majeure occurrence unless
specifically allowed for. The problem becomes one of evidence - that is, whether
the party relying on the force majeure provision can establish that the
occurrence on which it depends is covered in the contract. In this regard, since
the provision is considered a business solution rather than a legal one, it will
be interpreted in a natural manner and not subject to the constraints that are
employed to minimize the scope of an exclusion clause.
In certain (strictly restricted) instances, the English law notion of
frustration may allow remedy where the force majeure clause does not. In
summary, this concept stipulates that if an occurrence renders the fulfilment of
a contract impossible, unlawful or meaningless, the contract is 'frustrated' and
may be set aside. However, the grounds for this are difficult to achieve and the
outcome of putting the contract to an end may not be acceptable.
Approaches
From a conceptual standpoint, legal systems that permit an exception to pacta
sunt servanda in cases of impossibility may handle cases of imprévision in one
of three ways: they may refuse to release the parties until performance has
truly become impossible; they may expand the scope of the current impossibility
exception to include (some of) these situations; or they may create a new
exception.[11]
The French Approach: No Exception For Imprévision [12]
- Pacta Sunt Servanda principle: The French legal system lays major weight on the notion of pacta sunt servanda, meaning agreements must be respected. This idea is strongly rooted in French contract law, as demonstrated by the Canal de Craponne case (Cour de cassation, 1876). Therefore, parties should be careful when entering into contracts, ensuring they understand and agree to all conditions since courts are reluctant to amend contracts based on fairness or new circumstances alone.
- Primacy of Contractual Terms: French courts often regard freely negotiated contract terms as binding on both parties, stressing the significance of legal clarity and the autonomy of contractual parties. Therefore, parties should carefully discuss and construct contract provisions to represent their objectives precisely, since courts are hesitant to interfere and amend agreements, even in circumstances of hardship.
- Role of Good Faith: While the notion of good faith is acknowledged in French contract law, it is secondary to the idea of pacta sunt servanda. Breach of the responsibility to revise a contract in good faith may lead to a damage award rather than contract modification. However, recent judgments signal a probable change in the perspective of the commercial chamber of the Cour de cassation on the requirement to renegotiate in instances of supervening circumstances.
- Potential Remedies for Imprévision: Parties facing unexpectedly onerous contract performance may seek relief via different paths, such as invoking the notion of cause or incorporating hardship provisions in their contracts. However, the adoption of such techniques remains restricted and may not offer adequate protection. Therefore, parties are urged to incorporate explicit terms addressing supervening conditions in their contracts to limit risks efficiently.
- Uncertainty in Application: The existing legal framework underlying imprévision in French law seems to lack clarity and consistency, with varying approaches across civil and administrative courts, as well as conflicting interpretations among legal specialists. This uncertainty underlines the significance of receiving legal assistance and carefully evaluating contractual provisions before engaging in agreements, particularly long-term contracts.
The English Approach: Extension Of The Impossibility Exception
Although the English notion of frustration originated from an impossible[14]
scenario that would have most likely also been covered under the French law
exemption for force majeure, English Judges had no issue with expanding it to
situations in which performance had not been practically impossible[15]but would
be something else totally and not fulfil the stated aim. distinct from the
intentions of the parties at the time the contract was finalized.
In the first instance of this type,[16] Vaughan Williams LJ concluded that "the
immediate subject of the contract need not die or cease to exist on the day of
execution of the contract for the principle of Taylor v. Caldwell to be applied.
If a condition or state of affairs specified in the contract that is necessary
for its execution disappears or is not met at that point, that suffices.[17]
Drawing from this logic, English courts have implemented the theory of
frustration in cases where subsequent events have increased the burden of
performance to the point where it deviates significantly from the initial
agreement.[18]
Although the courts in these cases have a very high threshold for
frustration because they do not want the parties to be able to back out of a bad
deal[19], the Staffordshire Area Health Authority[20] ruling, which was rendered
in a case that was very similar to the French decision in Canal de Craponne,
shows how the slightly broader doctrine of frustration can be applied to reach a
different conclusion than what French courts would find.[21] frustration,[22] as
they apply the same theory.[23]
The theory of frustration was first founded on
an inferred phrase, but none of the English rulings seems to be seen as applying
the clausula rebus sic stantibus doctrine[24]. The Law Reform (Frustrated
Contracts Act) 1943 applies to the respective liabilities of the parties. More
importantly, since cases of impossibility and hardship are covered by the same
doctrine, the remedy is the same in both circumstances: if the high threshold
for frustration is met, both parties are automatically discharged, without the
need for intervention from the parties or the courts.
One benefit of this approach is that it does not need to make a difference
between situations that make performance impossible and situations that make
performance more difficult. But because this completely terminates the contract
without allowing for a contractual amendment, it might also be seen as one of
the primary reasons English courts have been especially hesitant to acknowledge
that a contract has been frustrated[25]. The all-or-nothing issue of whether
performance is still feasible may be justified by such an all-or-nothing
approach, but it may not address the more nuanced question of whether
performance in the initially agreed-upon manner is still fair.
Comparative Analysis
The incorporation of the Force Majeure doctrine from French contract law into
the traditional principles of English contract law has introduced significant
shifts and challenges. While English contract law traditionally emphasizes the
sanctity of contracts under the principle of "pacta sunt servanda" (Latin for
"agreements must be kept"), the introduction of Force Majeure principles
necessitates a reconsideration of this notion
- Impact on Contractual Obligations: The Force Majeure concept in French law allows for the non-performance of contractual obligations under certain unavoidable circumstances. This departure from the strict enforcement of contracts in English law challenges the traditional notion of contractual obligations as absolute and immutable.
- Legal Certainty vs. Flexibility: English contract law typically prioritizes legal certainty and the enforcement of contractual terms as written. The introduction of Force Majeure principles may introduce uncertainty by allowing for the potential suspension or termination of contracts in unforeseen circumstances, thus necessitating a balance between certainty and flexibility in contractual relations.
- Interpretation and Application: The interpretation and application of Force Majeure clauses in English contracts require careful consideration. Unlike civil law jurisdictions, where Force Majeure is codified and interpreted liberally, English courts typically interpret contracts strictly according to their terms. This difference in approach may lead to challenges in reconciling the application of Force Majeure clauses in cross-border contracts.
- Contractual Drafting and Negotiation: The incorporation of Force Majeure clauses into English contracts necessitates careful drafting and negotiation. Parties must clearly define the scope of Force Majeure events and the consequences for non-performance to avoid ambiguity and potential disputes in the future.
Overall, the introduction of Force Majeure principles from French contract law
into English contract law represents a departure from traditional principles,
requiring a careful balancing of legal certainty, flexibility, and contractual
obligations in cross-border transactions.
Conclusion
Conclusively, the examination of the Force Majeure theory in French contract law
in contrast to the conventional principles of English contract law indicates
notable distinctions in methodology and implementation. English law tends to
have a more limited view of force majeure, concentrating on whether the contract
has fundamentally changed from what was first intended, while French law
stresses the idea of force majeure as an occurrence beyond the affected party's
control. The study draws attention to the difficulties and nuances of
reconciling different legal concepts across jurisdictions, especially in light
of rising cross-border exchanges and globalization.
Even if standardization
might lead to more legal clarity and more peaceful conflict settlement, the
integration of the Force Majeure theory into English contract law could
eventually weaken established norms. Though it has a high application threshold,
the English method of extending the impossible exception via frustration
provides flexibility in handling unanticipated events. In the end, more
investigation and discussion are required to successfully negotiate the changing
terrain of contract law and guarantee fair results for all parties engaged in
cross-border transactions.
End Notes:
- [2021] EWHC 1152 (Comm)
- [2020] EWCA Civ 87
- Bsc LLB(4th sem), The School of Law, Forensic Justice & Policy Studies, National Forensic Sciences University (NFSU), Gandhinagar, Gujarat
- "Force Majeure" Cornell Law School, Legal Information Institute, https://www.law.cornell.edu/wex/force_majeure
- "The Principle Pacta Sunt Servanda and the Nature of Obligation Under International Law", American Journal of International Law, via JSTOR, https://www.jstor.org/stable/2203309
- "Impact of COVID-19 on French Law Governed Contracts", Latham & Watkins, Page 1 https://www.lw.com/thoughtLeadership/Impact-of-COVID-19-on-French-Law-Governed-Contracts
- Law And Regulation Of Force Majeure In France, Anne-Laure Villedieu, https://cms.law/en/int/expert-guides/cms-expert-guide-to-force-majeure/france
- Force Majeure And Imprévision Under French Law, Shearman & Sterling, pdf
- Practical outline for potential litigation on the grounds of article 1195 of the Civil Code, https://s3.amazonaws.com/cdn.orrick.com/files/ArticleODAimprevisionAnglais.pdf
- Frustration v Imprévision, Why Frustration is so 'Frustrating': The Lack of Flexibility in the English Doctrine's Legal Consequence, Bashayer Al Majedcorresponding and Abdulaziz AlMajed, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10220328/#:~:text=Under%20the%20new%20Article%201195%20(French%20Civil,where%20that%20risk%20had%20not%20been%20assumed
- Hondius, E. H., & Grigoleit, H. C. (year of publication). Different Classifications of 'Open' and 'Closed' Legal Systems. In Hondius, E. H., & Grigoleit, H. C. (Eds.), (n 13), pp. 10-12; 643-644.
- Introducing Imprévision Into French Contract Law, Tobias Lutzi, MPhil Candidate, University of Oxford
- Cass civ 6 March 1876, D 1876, I, 193.
- Taylor v Caldwell, (1863) 3 B & S 826.
- It could be argued that performance had not become literally impossible in Taylor v Caldwell either, since it would probably have been possible, in theory, to rebuild the concert hall (cf. Treitel, G. H. (n 11), para. 6-001).
- Krell v Henry [1903] 2 KB 740 (CA)
- ibid, 754
- Cf Metropolitan Water Board v Dick Kerr [1918] AC 119 (HL)
- Cf Davis Contractors [1956] AC 696 (HL); Amalgamated Investments & Property Co Ltd v John Walker & Sons Ltd [1977] 1 WLR 164 (CA); Ocean Tramp Tankers Corporation v V/O Sovfracht (The Eugenia) [1964] 2 QB 226 (CA).
- While the majority construed the contract as being concluded for an indefinite period of time and thus open to termination upon reasonable notice, Lord Denning considered it to have ceased to bind because 'the situation has changed so radically since the contract was made.' (ibid, 1398). See also Hondius/Grigoleit (n 13), 212–4
- Cf McKendrick (n 21), 723. Cases of illegality are usually distinguished as a third type.
- Cf Krell v Henry (n 71), 749, where Vaughan Williams LJ even considered the contract to have become 'impossible of performance by reason of the non-existence of the state of things assumed by both contracting parties as the foundation of the contract'
- Cf Weir, 'Review of "Frustration of contract and clausula rebus sic stantibus"', (1988) 37(2) ICLQ 452.
- Cf McKendrick (n 47), 42–5.
Written By: Shekhar Chandra Gupta, Bsc LLB(4th sem), The School of Law, Forensic Justice & Policy Studies, National Forensic Sciences University (NFSU), Gandhinagar, Gujarat
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