In light of recent events such as global pandemics, supply chain challenges, a rising interest rate environment, and tight labor markets, parties may start giving extra attention to the “force majeure” clauses included in many commercial contacts, which can be used to excuse performance by a party due to certain events outside of that party’s control. The enforceability and interpretation of force majeure clauses vary from state to state, depending on which state’s law governs the contracts, with some states having more well-defined case law parameters than others.
When evaluating the enforceability and interpretation of force majeure clauses in contracts governed by Minnesota law, courts in Minnesota will look at the specific language included in the force majeure clause and will excuse performance under the contract in accordance with such language. For example, if the event giving rise to the claim of force majeure is explicitly identified in the list of force majeure events included in the contractual definition of force majeure (e.g., a labor strike, hurricane, etc.), then Minnesota courts will generally excuse performance under the contract as a result of such event, under the theory that the contracting parties intentionally allocated the risk of the specified event to the non-impacted party. However, Minnesota courts will also generally conclude that the impacted party is only excused from performance under the contract if the event giving rise to the force majeure claim is serious enough to materially interfere with such party’s performance, and the burden of proof in asserting a force majeure claim is on the asserting party. In determining the remedy upon the occurrence of a force majeure event, Minnesota courts also generally assert that the contractual language will govern the remedy available to the non-performing party. In the event a force majeure clause requires that the non-performing party mitigate the impact of the force majeure event, give notice to the other party within a certain time period, or provide the other party with the right to terminate the agreement, Minnesota courts will typically find such provisions to be enforceable as well.
Similar to Minnesota courts, Delaware courts will generally find force majeure clauses in contracts governed by Delaware law to be enforceable in accordance with the specific terms set forth in such force majeure clauses. In Delaware, courts will also generally hold that a claim of economic hardship is not a valid argument to excuse performance under a contract, so the force majeure clause must explicitly identify the specific event giving rise to the force majeure claim. In contrast to Minnesota courts, Delaware courts generally expect parties that claim non-performance as a result of a force majeure event to mitigate and minimize the occurrence and effect of a force majeure event.
When drafting force majeure clauses in contracts governed by Minnesota law, practitioners should be thoughtful in considering which specific events to include in the definition of a force majeure event. In particular, Minnesota practitioners should pay particular attention to setting forth the rights, remedies, and obligations of the parties upon the occurrence of a force majeure event.