The function of force majeure in France

Force majeure plays a central part in the structure of contractual law in French contract legal system. It derives from the Roman law term vis maior.

The term force majeure is likewise undefined where it occurs in the French Civil Code. The Code is not given to definitions and indeed French statutes generally lack the definition section. In French legislation the meaning of a term is commonly left to be worked out by doctrine and the courts.

The function of force majeure is essentially the same as it was in Roman law. It sets a limit to strict liability. French law inherited from Roman law the premise that contractual liability was, apart from some exceptional cases of strict liability, based on fault. It was only in those exceptional cases that force majeure could be relevant, since in the ordinary situation all that was necessary to exclude liability was absence of fault. What has changed in the modern law is the range of the situations in which strict liability occurs.

The law has come to distinguish in two broad categories of obligation to which a contract can give rise. In the case of what are called obligations de moyens the party at issue is obliged only to exercise reasonable care, not to achieve a particular result. The example is that of the doctor, who is obliged to take reasonable steps to cure his patient but is not liable if nevertheless he fails to do so. In the case of what are called obligations de resultat, however, the party is obligated not simply to show due diligence, but to achieve the result envisaged. If he fails to do so, he is liable in damages. Thus it has long been settled that a contract for the carriage of goods or persons obliges the transporter to carry the contract for the carriage of goods or person safely to the destination. The obligation is not absolute. The party obliged will be exempt from liability if he can show force majeure.

The essential difference between the two categories of obligation lies in the burden of proof. In both cases the burden of showing that the party obliged has not performed his obligation lies of course with the other party. Where the obligation in question is de moyens, he must prove failure to show due care. i.e. fault, but where the obligation is de resultat, he has only to show that the result has not been achieved. It is then for the party obliged to prove force majeure. The difference between the two burdens becomes crucial when the cause of the failure to achieve the result is unknown.

It should likewise be noted that force majeure may have only a partial or temporary effect on the obligation and in such a case will provide only a partial or temporary exemption.

As far as the Civil Code concerned, the law of Force majeure has been founded on two articles which occur in the section entitled “Of damages for non-performance of the obligation":

“1147. The debtor is condemned, where appropriate, to the payment of damages, whether for non-performance of the obligation or for delay in its performance, whenever he does not show that the failure to perform derives from an extraneous cause which cannot be imputed to him, even though there is no bad faith on his part.

1148. there is no place for any damages when, as a result of a force majeure or an accident, the debtor has been prevented from conveying or doing that to which he was obliged or has done what was forbidden to hm."

These articles are regarded as applying to obligations de resultat, [1] i.e. to cases of strict liability. They introduce, alongside force majeure, two other concepts, cause étrangère and cas fortuit. Article 1147 is treated as the more general statement, expressed in terms of causation and requiring the debtor to show that the nonperformance has a cause which is extraneous to him and for which he is not responsible. Article 1148 appears to give two instances of such a cause étrang-ère, but it is now agreed that no useful distinction can be made between force majeure and cas fortuit and the former term is almost exclusively used. It does not, however, embrace all forms of cause étrangère, it is usual to identify in addition (a) an act of a third party which makes performance impossible and (b) an act or fault of the creditor.

The central principles which have been recognized by the courts are that in order to constitute force majeure an event must have been (a) irresistible, (b) unforeseeable, and (c) external to the debtor, and must (d) have made performance impossible and not merely more onerous or difficult.

Irresistibility

This applies both to the event and to its consequences and embraces the requirement that they should also have been unavoidable and insurmountable. So in the case of a contract for delivery of goods which would normally travel by sea, a strike which the debtor could not prevent will satisfy the requirement of irresistibility, but if it is possible to use air transport, there is no force majeure (assuming, of course that the contract does not specify sea transport as the only means to be used).the criterion to be applied is abstract or objective in the sense that a reasonable person could not have resisted or surmounted the obstacle in the circumstances in which the event occurred.

Unforeseeability

Little is literally unforeseeable and therefore to require that the category of event in question (a fire, a hurricane, a strike, legislation) should be unforeseeable in any circumstances would risk converting strict liability into absolute liability. The test which is applied is that the event must have been unforeseeable by a reasonable person at the time of the contract and in the circumstances in which it was made. Administrative delay in the granting of a building permit has been held to be foreseeable, but the order to evacuate in 1940, which caused a garage-owner to leave behind the plaintiff’s car, was not. [2] 

Externality

This requirement has its primary application in cases of delict, where the defendant cannot escape liability for a thing sous sa garde by showing, for example, that the damage was caused by an irresistible and unforeseeable defect in the thing itself. To allow him to do so would drastically curtail the scope of the liability. The same applies to cases of contractual liability in which the cause of the non-performance resides in a thing within the control of the debtor. So a restaurateur who served infected turbot could not plead that the presence of an unforeseeable and insurmountable bacillus constituted force majeure. But it is difficult to say how far the requirement applies to cases in which the cause of the non-performance resides in a person. Illness of the debtor himself has been held to constitute force majeure where personal performance is essential (a playwright unable to deliver a script in time because of acute toothache and the resulting dental operation [3] ) but, in general, illness is to be foreseen and provided against. In general, the fact that the non-performance is due to the fault of persons acting on behalf of the debtor cannot constitute force majeure. So the owners of a ship were liable for loss caused by the crew’s forcibly taking over the ship. re causes difficulty.

Impossibility

The principle has been laid down that “force majeure refers to events which make performance impossible, not to those which only make it more onerous". There is no room for a doctrine of frustration or impracticability in American law or for the German concepts of economic impossibility or disappearance of the basis of the transaction. This narrow principle has in general been rigorously applied, even in the aftermath of the two world wars

Consequence of force majeure

Article 1147 and 1148 of the Civil Code say that force majeure exempts the debtor from damages; this exemption may be only partial or temporary. Such a plea for exemption from damages has no effect on the continuing existence of the contract.

If force majeure makes performance of the obligation or obligations in question wholly and permanently impossible, there is also another consequence. French law accepts the principle that an obligation to do the impossible is void (impossibilium nulla obligation). [4] Where therefore the obligation or obligations are essential to the debtor’s performance as a whole, the contract itself should necessarily be void and restitution should follow automatically, without recourse to the courts. This is the position of principle, but the courts take a different line. They treat the case as, in common law terms, one of breach. They do so because this permits them to introduce a large element of flexibility. Since French law, unlike the common law, does not recognize rescission by the act of a party alone, the creditor must have recourse to a court. And the court, in reaching its decision, has a wide discretion, in this case as in ordinary cases of breach, to grant or not to grant rescission. Where, for example, the contract has been performed in part before the force majeure supervenes, or where the force majeure does not wholly or permanently prevent performance, the court may indeed rescind the contract and order restitution, but it may also refuse to do so. Of course articles 1147 and 1148 debar it from awarding damages, but it can reduce or vary the creditor’s obligation in order to take account of the reduced obligation of the debtor. Moreover, the question whether the effect of the force majeure is partial or temporary is one of fact and therefore not subject to review by the Court of Cassation. This introduces a considerable element of flexibility into the apparent rigour or rigidity of the rules of force majeure.

The courts’ use of the remedy of rescission, contrary to principle though it is has considerable advantages. But it also has a disadvantage. Rescission, if granted, is retrospective to the beginning of the contract. This has the corollary that restitution must be made of benefits received by each party. This, though it may be satisfactory in cases of breach, may be inadequate in cases of non-performance because of force majeure. If, for example, one party has incurred expense when total impossibility supervenes, but the other has not yet received any benefit, a simply restitutionary remedy is plainly inequitable. Problems such as this, which are to some extent provided for in English law in the Law Reform (Frustrated Contracts) Act 1943, seem to have attracted no attention in French law. The narrower scope of the doctrine of impossibility does reduce their practical importance.

Imprévision

The statement that French law has nothing to correspond to frustration or impracticability or economic hardship needs a limited qualification. It is strictly true only of private law contracts.

French law makes a fundamental distinction between public law and private law, which constitute two separate systems, applied by two totally distinct hierarchies of courts. It is here concerned only with the application of the distinction to contracts. The identification of the contracts which are subject to the jurisdiction of the public (administrative) courts is a matter of considerable complexity and some controversy, but it is sufficient to say that the first essential is that one of the parties must be a public body or at least a body providing a public service and the other (private) party must contract to provide such a service. In general the administrative courts apply to public contracts the law of the Civil Code, as applied by the ordinary courts, though with special rules to take account, for example of the need for public contracts to be duly authorized. The most important differentiating features derive from the need to secure the overriding purpose of all administrative law, which is to ensure the supremacy of the public interest. In the contractual context this means that the rights of the private party, even if they are embodied in the terms of the contract, may not stand in the way of the public interest. The administration may unilaterally modify or abrogate the contract if that is necessary to protect the public interest (and the power to do so will in fact often be expressly stated in the contract). the administration must, however, compensate the private party for any loss which he suffers by the overriding of his rights.

Finally, it is a characteristic of the whole of administrative law that the administration has the privilege of enforcement by executive act, without recourse to the courts. It can take whatever steps are necessary to enforce or supervise the contract, without invoking the assistance of the courts. The private party can take the matter to the administrative courts (which, however, lack the power to grant an interlocutory injunction), but the administration is never the plaintiff.

It is against this background that the principle of Imprévision was developed.

If supervening circumstances make performance of the contract seriously uneconomic for the private party and the administration insists on continuing performance, the private party may go to the administrative court.

If the court decides that it is necessary in the public interest that the contract should continue to be performed, it will order that the party be indemnified against the additional cost which he incurs. The principle was finally established by a decision in 1916. the facts were that in 1904 the City of Bordeaux had contracted with a company for the provision of gas-lighting in the streets, the price to be paid for the gas being fixed in the contract. as a result of the overrunning by the Germans in 1914 of a large part of the French coalfields, the price of coal rose steeply (by the time of the hearing it had increased fourfold in 20 months). The company there fore faced collapse, with the consequence that the streets would be unlit. The court took the view that it was not in the public interest that this should happen and ruled therefore that the company should continue to perform the contract and that an appropriate indemnity should be paid. The question to be asked was not whether performance had become impossible, but whether the “economy of the contract" had been overthrown.

It is possible to draw an analogy between imprévision and the English doctrine of frustration. The foundation of imprévision is the need to protect the public interest, a need which is not usually found in ordinary commercial contracts and one which in any event a court would hardly be justified in meeting at the expense of one of the parties.

In the famous Gas de Bordeaux case, the Commissaire de gouvernement, whose opinion was accepted by the Conseil d’Etat made the following observations:

Since concessions are granted for very long periods it may happen during that time that events occur which disturb their economic equilibrium, events which could not have been foreseen at the moment of contract. it may happen that the holder of the concession may no longer be able to provide the service under the terms fixed by the contract. it may happen that the holder of the concession may no longer be able to provide the service under the terms fixed by the contract. what should the court do when the parties cannot reach agreement? If we were dealing whit a contract governed by private law and covered by the provisions of the Civil Code we would only have to look at Art 1134…

But he then went on to say:

But are those rules applicable to public law contracts? No doubt you will follow the main principles of the Code; but, when it is a question of public works contracts, of transport, of services, you also have to take into account the general interest…Furthermore, and above all, you have applied very widely the principle that contracts should be carried out in good faith and in conformity with the intention that the parties had at the moment of contract. you have also been led to take account of facts which could not then have been foreseen, of exceptional difficulties that no one dreamed of, which have been encountered by the entrepreneur…And in may decisions stretching over years you have worked out the doctrine called ‘the theory of unforeseen circumstances’(imprevision)

Copyright (c) 2009 Victoria University of Wellington

Victoria University of Wellington Law Review

April, 2009

39 VUWLR 709

LENGTH: 7780 words

WIDER PERSPECTIVE: FORCE MAJEURE AND HARDSHIP IN INTERNATIONAL SALES CONTRACTS

NAME: Ingeborg Schwenzer *

The position of French law represents one extreme and it is well documented. Whereas the rule for force majeure is laid down in Article 1148 of the Code Civil (CC), neither general civil law nor commercial law has been favourable to the concept of hardship. n6 The famous theory of imprevision n7 that allows a contract to be modified in case of a change of circumstances has been applied to administrative contracts only. n8 However, the Cour de Cassation has apparently moved [*711] away slightly from the strict pasta sunt servanda principle; it appears to be heading in the direction of eventually recognising some kind of hardship. n9

n6 See Catherine Kessedjian "Competing Approaches to Force Majeure and Hardship" (2005) 25 Int'l Rev L & Econ 415, 427.

n7 For details, see Phillippe Stoffel-Munck Regards sur la theorie de l'imprevision: vers une souplesve contractuelle en droit prive francais contemporain (Presses universitaires d'Aix-Marseille, Aix-en-Provence, 1994).

n8 See Conseil d'Etat, 30 Mar 1916, DP1916, 325; Piet Abas Rebus sic stantibus (Karl Heymanns, Cologne, 1993) 43.

n9 See Philippe Malaurie and Laurent Aynes Droit Civil: Les obligations (3ed, Editions juridiques associces, Paris, 2007) 379-380, stating that the judge cannot alter the contract directly on his or her own unless the parties have agreed upon a clause de sauvegarde (hardship clause) or the law itself provides for the possibility of the judicial adjustment of the contract. however, the judge is entitled to apply the principle of good faith according to Article 1134(3) CC if there is a severe inequity and one party is acting in bad faith. See also Kessedjian, above n 6, 425.

Hardship and Changed Circumstances as

Grounds for Adjustment or Non-Performance of Contracts

Practical Considerations in International

Infrastructure Investment and Finance

Frederick R. Fucci

There is no statutory provision or definition of hardship for commercial contracts under French law, although there is a general principle of French law that a contracting party is liable in damages for the non-performance or delay in performance of an obligation "whenever it does not demonstrate that the non-performance comes from an external cause which may not be imputed to it."[8] Hardship clauses are routinely inserted into commercial contracts between private parties governed by French law. If a contract governed by French law contains no hardship clause, French courts would not read one into it, unlike in the case of force majeure, which is part of the French civil code and thus applicable to all contracts.[9]