“FORCE MAJEURE” DEFINED
As stated by Turner, D.F.[1], “force majeure” is not a phrase native to English or Scots Law; and actually is a French law term[2]. A very brief definition for force majeure is, “irresistible compulsion or coercion”[3]. As further stated by Turner, D.F.[4] and Powell-Smith, V & Sims, J.[5] the term is wider in its meaning than the common law term “Act of God”, but its meaning is imprecise. It refers to exceptional matters or events beyond the control of either party. In other words, it refers to any overwhelming superhuman event[6]. In Lebeaupin v. Crispin[7] Mc Cardie, J. said:
This term is used with reference to all circumstances, independent of the will of man, and which it is not in his power to control….
Stroud's Judical Dictionary of Words And Phrases[8] it is stated in respect of the term force majeure that:
The words, force majeure taken from the Code Napoleon and inserted as an exception in shipbuilding contracts were held by Bailhache 3., to have a more extensive meaning than "act of God" or Vis major". He held that they covered dislocation of business owing to (a) a universal coal strike; (b) accidents to machinery
In Global Destar (M) Sdn Bhd v. Kuala Lumpur Glass Manufacturers Co Sdn Bhd[9] Abdul Wahab Patail, J. states:
It is observed that the list relates to dislocation of business by various actions and events, but does not encompass condition of business or economic climate such as a depressed economy. The ups and downs of business or economic climate are part of the risk of doing business. The term force majeure is not intended to enable one party to renege upon its contract to take advantage of and profit from better deals available, but in this case to protect each party from laws or war, strikes, lockouts, breakdowns or other circumstances beyond the control … causing the party to be able to perform their part of their bargain.
Again, in Lebeaupin v. Crispin[10] McCardie, J. said further,
Thus war, inundations and epidemics are cases of force majeure; it has even been decided that a strike of workmen constitutes a case of force majeure.
McCardie, J. [11] added further that any direct legislative or administrative interference would come within the term: for example, an embargo. In the case of Matsaukis v Priestman & Co.[12], the dislocation of business caused by the general coal strike and breakdown of machinery are instances of force majeure.
ELEMENTS
There are three elements to constitute “force majeure”, as stated by Lord Denning MR in Toruay Hotel Co. Ltd. v. Cousins & Ors.[13]:
1. There must be interference in the execution of the contract. The interference is not confined to the procurement of a breach of contract. It extends to a case where a third party prevents or hinders one party from performing his contract, even though it be not a breach;
2. The interference must be deliberate. The person must know of the contract or at any rate, turn a blind eye to it and intend to interfere with it; and
3. The interference must be direct.
THE EXISTENCE IN STANDARD FORMS
If we refer to most standard forms of construction contracts, we can find this force majeure clause. For those who are using PWD 203 (or 203A)[14] standard form of contract, clause 43.1(a) Conditions of Contract is relevant. According to clause 43.1(a), upon it becoming reasonably apparent that the progress of works is delayed, the contractor shall forthwith give written notice of the causes of delay to the Superintending Officer, and if the completion of the works is likely to be delayed or has been delayed by force majeure (or any other reasons stated in that clause) then the officer named in the Appendix may give a fair reasonable extension of time for completion of the works. The latest edition (2007) of PWD 203 form, a specific clause, i.e. clause 57 Conditions of Contract, has been introduced. Sub-clause 57.2 Conditions of Contract elaborates “the event of force majeure”:
An “Event of Force Majeure” is an event beyond the control of both Parties which are:
(a) war (whether declared or not), hostilities, invasion, act of foreign enemies;
(b) insurrection, revolution, rebellion, military or usurped power, civil war, terrorism;
(c) natural catastrophe including but not limited to earthquakes, floods, subterranean spontaneous combustion or any operation of the forces of nature against which an experienced contractor could not reasonably have been expected to take precautions;
(d) nuclear explosion, radioactive or chemical contamination or radiation (unless caused by the negligence act, omission or default of the Contractor, its agents or personnel);
(e) pressure waves caused by aircraft or other aerial devices traveling at sonic or supersonic speeds; and
(f) riot, commotion or disorder, unless solely restricted to employees of the Contractor or its personnel, servants or agents.
Under clauses 43 and 50.2 Conditions of Contract PWD 203, force majeure will be one of the reasons for extension of time and mutual termination.
For those who are using PAM 2006 standard form of contract, the force majeure clause appears in clause 23.8(a) Conditions of Contract (the clause relating to “Relevant Events” causing delay where the contractor may be given a fair and reasonable extension of time). The equivalent provision is also appears in clause 24.1(a) Conditions of Contract of CIDB 2000 standard form of contract (i.e. the Superintending Officer may extend the time for completion if the delay caused, inter alia, by force majeure). Clause 43(a) Conditions of Contract of IEM C.E 1/89 is also relating to force majeure. The force majeure clause is also appears in JCT 1980 standard form of contract (clause 25.4.1 Conditions of Contract) and IFC 1984 standard form of contract (clause 2.4.1 Conditions of Contract). Under these relevant clauses in these agreements, force majeure will be one of the reasons for extension of time and mutual termination.
[1] Turner, D. F. 1987. Building Contracts – A Practical Guide. 4th. Edition. Essex : Longman Scientific & Technical, p. 59.
[2] Powell-Smith, V. & Sims, J. 1988. Building Contract Claims. 2nd. Edition. Oxford
[3] Saunders, J.B. (Ed.). 1977. Mozley & Whiteley’s Law Dictionary. 9th. Edition. London
[4] Op. cit.
[5] Op. cit.
[6] As stated in the case of Oakley v. Portsmouth & Ryde Steam Packet Co. (1856) T.I. Exchequer Reports 6 1.F.
[7] [1920] 2 K.B. 714
[8] 6th. Edition by Daniel Greeberg Volume 1- referred by Abdul Wahab Patail, J. in Global Destar (M) Sdn Bhd v. Kuala Lumpur Glass Manufacturers Co Sdn Bhd [2007] 1 LNS 54. High Court, Kuala Lumpur
[9] Ibid.
[10] Op.cit.
[11] Ibid.
[12] [1915] 1 K.B. 681
[13](1969)2 WLR 289 at p. 300. Referred by Muhammad Kamil Awang, J. in MJC City
[14] 2007 Edition.
More detailed discussion on FORCE MAJEURE can be found in Abdul Aziz Hussin (2002) Force Majeure Clause. The Journal of Malaysian Surveyor. 37.3: 6-8.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.