Force majeure

What it means

Force majeure is an extraordinary event beyond the parties’ control that could not reasonably be foreseen and could not be averted or overcome. Typical examples are natural disasters, floods, fires caused by lightning, war, epidemics or official bans that make performance of a contract impossible.

The Slovak Commercial Code treats force majeure as a circumstance excluding liability. If a party could not perform because of an obstacle with these features, it is not liable for damages caused by delay or non-performance. The obligation to perform itself generally does not lapse, however; it is only suspended while the obstacle lasts.

Many contracts contain their own force majeure clause. It may list in detail what counts as force majeure, what the parties must do when it occurs, such as give notice within a set time, and what happens if it lasts too long, for example a right to terminate.

How it works in practice

When reviewing clients’ contracts, we check whether they contain a force majeure clause and whether it suits their business. A broad definition favours the supplier, a narrower one the customer. It is sensible to agree a notification duty and a period after which either party may terminate.

When an event that may be force majeure occurs, we advise notifying the other party in writing without delay, describing the obstacle, its effect on performance and its expected duration. It is also important to document why it could not be averted and to try to mitigate its consequences. Without this, relying on force majeure is difficult.

With contractual penalties, it matters whether the contract ties the penalty to fault. If not, force majeure may not automatically protect against it. That is another reason to draft contracts so that no penalty arises when performance is prevented by force majeure.

What to watch out for

Ordinary business risks, such as rising prices, a subcontractor’s failure or staff shortages, are not force majeure if they could have been foreseen or dealt with otherwise. Courts assess force majeure strictly, and the party relying on it must prove it.

Force majeure protects against liability for damages, not against lost revenue. A company can protect itself from the consequences of extraordinary events with a business continuity plan and business interruption insurance, which covers lost profit from an insured event.