In light of the current Coronavirus pandemic, I’ve been party to discussions regarding “force majeuer” clauses.
What is “force majeure?” French and Latin languages suggest the origin of the word means “superior force.” Other meanings include “chance occurrence,” “unavoidable accident” and/or “acts of God.”
Actual examples of force majeure causation often include, “war, strike, riot, crime, plague, terrorism … or possibly a pandemic, hurricane, flood, earthquake” or the like.
The important thing to keep in mind that force majeure clauses generally by default allow a party to suspend performance, but not excuse a party’s non-performance altogether.
Further, such suspension of performance is generally only permitted for the duration of the force majeure. In regard to a flood, for example, performance would be mandated once the floodwaters receded and the land dried to prior levels.
There are three (3) distinct contracts in regard to most auctioneers: The listing contract (auctioneer and seller/consignee,) the registration contract (auctioneer and bidders,) and the sales/purchase [bid calling] contract (buyer and seller.)
Our treatise https://mikebrandlyauctioneer.wordpress.com/2009/12/29/the-three-3-types-of-auction-contracts/ from 2009 explores auctioneer-related contracts in more detail.
In regard to auctioneer-related circumstances, these force majeure clauses might allow a seller to delay selling, a buyer to delay buying or an auctioneer delay from working as such.
However, how are force majeure clauses enforced?
- There must be a causal connection between the event and the non-performance.
- The party wishing to be excused from timely performance has generally the obligation to provide specific and timely notice to the other party.
- A few states have codified force majeure protections into state law thus making them part of a contract largely unnecessary.
Are force majeure clauses a good idea or always necessary? The laws today almost automatically give rights of suspension or termination of performance in cases of “impracticability,” “impossibility” and “frustration of purpose.”
More on those and other related topics here: https://www.lexisnexis.com/lexis-practice-advisor/the-journal/b/lpa/posts/drafting-advice-avoiding-disastrous-force-majeure-clauses.
Lastly, it’s imperative that you have your attorney write or review your force majeure clause to ensure its necessity, applicability and likely enforceability in the jurisdictions in which you operate.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.