[co-author: Mary Hatcher]*

The recent derecho storm caused severe damage throughout Houston and the surrounding area. The intense winds and flash flooding served as a costly lesson to many contractors and project owners. With the expected active hurricane season in our midst, and storms that can strike without warning, construction industry stakeholders should bear in mind the importance of effectively managing hurricanes and other “Acts of God” during the pre-construction and construction phases of every project. Although difficult to plan for highly destructive, low probability events, contractual force majeure provisions can help mitigate damaging consequences.

Force majeure events are events which are unforeseeable and unavoidable by a contracting party. Common examples impactful to the construction industry include natural disasters (such as earthquakes, tornadoes, and hurricanes), war, and embargoes. If properly executed, a force majeure provision excuses an impacted party’s performance upon the occurrence of a force majeure event. Although Texas courts often defer to the language of the provision, there are concerns that may arise when enforcing a force majeure provision.

“Catch-All” Provisions May Not Actually Catch All

Some provisions may be drafted too narrowly, meaning the event may not qualify as a force majeure event. Although “catch-all” language can be used to avoid this pitfall, the language must still illustrate the intent of the parties to include the particular unforeseeable event. If an event is not specifically listed, but there is “catch-all” language, a court may determine whether the event is foreseeable. An event is usually foreseeable if it was anticipated and preventable. An event must be unforeseeable to be included with the “catch-all” language. For example, the derecho storm could be considered unforeseeable because it was so sudden and unpreventable. However, economic events, such as a change in the market, are considered foreseeable by law and cannot be included in the “catch-all” language.

If there is further question on whether the event was intended to be included, courts may apply the doctrine of ejusdem generis. Ejusdem generis states when general words follow a list of specific words, the general words apply only to things of similar class to those specifically listed. The “catch-all” language would apply only to the events of similar nature to the ones listed specifically in the force majeure provision.

Be Aware of Notice Requirements

You should be mindful of any notice requirements when reviewing a force majeure provision. you should ensure that you follow the notice procedures, so you do not accidentally waive your right to relief. Notice requirements could be a wholly separate provision in the agreement. Although giving notice is likely the last thing on your mind amid the chaos and clean-up of a force majeure event, it is important to ensure the deadline does not go unnoticed.

Controllability and Mitigation Efforts Might Be Necessary

Depending on the language in the force majeure provision, you may have to prove you lacked control over the event and attempted to mitigate its effects. Courts look to the intent of the parties when drafting the provision to determine if this is necessary. Without language in the provision illustrating a control requirement or a duty to mitigate, a court will not impose one. It is important to note whether the force majeure provision contains language imposing a control requirement or duty to mitigate to determine what you must prove to obtain relief.

Proximate Cause May Be a Factor

The language of a force majeure provision may require a party to prove the event proximately caused nonperformance under the contract. Showing proximate cause requires a showing that without the event, the nonperformance would not have occurred. Unless the language of the provision establishes a causal requirement, one will not be enforced. So, it is important to monitor the language of a force majeure provision to understand if proximate cause is a requirement.

Bottom Line

When used effectively, force majeure provisions can help mitigate the damage and chaos that ensues on construction projects following force majeure events. However, taking advantage of a force majeure provision requires forethought. Ensuring the provision is constructed carefully to express the true intent of the parties and being prepared to provide any other requirements of the provision when necessary is crucial in exercising the rights provided by the provision. Force majeure provisions provide a significant risk reduction for construction projects during hurricane season, so be sure to consult with a construction attorney while engaging in due diligence for your next project.

*A rising 2L at South Texas College of Law and a Gray Reed summer associate.

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