| Contract Series: Fortuitous Events or Force Majeure |
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Maybe you've come across the terms fortuitous events, force majeure, caso fortuito in contracts. These are synonymous terms which may appear intimidating at first glance. As will be shown below, however, these terms are really not as intimidating as they look. A fortuitous event is one which could not be foreseen, or which though foreseen, is inevitable. "An event is considered fortuitous if the following elements concur: (a) the cause of the unforeseen and unexpected occurrence, or the failure of the debtor to comply with his obligations, must be independent of human will; (b) it must be impossible to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must be impossible to avoid; (c) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and (d) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor. Maybe you've also heard of the terms "act of God" and "act of man." A fortuitous event under Article 1174 of the Civil Code may either be an "act of God," or natural occurrences such as floods or typhoons, or an "act of man," such as riots, strikes or wars. These terms usually appear in contracts in the following language: If the performance of this Agreement, or any obligations hereunder is prevented, restricted, or interfered with by reason of: fire, flood, earthquake, explosion or other casualty or accident or act of God; strikes or labor disputes; war or other violence; any law, order proclamation, regulation, ordinance, demand or requirement of any governmental authority; or any other act or condition whatsoever beyond the reasonable control of the affected party, the party so affected, upon giving prompt notice to the other party, shall be excused from such performance to the extent of such prevention, restriction or interference; provided, however, that the party so affected shall take all reasonable steps to avoid or remove such cause of non performance and shall resume performance hereunder with dispatch whenever such causes are removed. Why is this provision important? There are times that either or both of the parties could not perform its/their end of the contract due to certain events. The non-performance of the obligation would generally result to a breach of contract. However, the happening of the fortuitous events that are specifically enumerated by the parties or that fall under the general definition provided in the contract, generally excuses a party from performing his obligations. In other words, there's no breach of contract or damages to speak of.
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