Force majeure

How BC law treats it

Force majeure is not a free-standing doctrine in BC law. It exists only as a contract term, and its effect depends entirely on the wording the parties chose. Courts ask whether the event falls within the listed events or general words, whether it actually caused the failure to perform, whether it was beyond the party's control, and whether the party complied with any notice and mitigation requirements. In Atlantic Paper Stock Ltd v St Anne-Nackawic Pulp and Paper Co, [1976] 1 SCR 580, the Supreme Court of Canada described force majeure as covering unforeseen events beyond a party's control that make performance impossible, and held that the clause there did not protect a party from a business downturn it could have anticipated. Many clauses require that the event prevent performance, not simply make it more expensive. Rising costs or loss of profit are rarely enough. The US concept of commercial impracticability is not part of BC law. Relief is usually suspension of performance for the duration of the event, often with a right to terminate if the event continues past a set period. Without a clause, a party must rely on frustration, a much narrower doctrine. A contract is frustrated only when a supervening event, not caused by either party, makes performance radically different from what was agreed (Naylor Group Inc v Ellis-Don Construction Ltd, 2001 SCC 58). If a contract is frustrated, the Frustrated Contract Act, RSBC 1996, c 166 governs how losses and payments are adjusted between the parties.

What it means for your business

Supply disruptions, wildfires, floods, pandemics and government orders can stop a BC business from performing. A well drafted force majeure clause gives a clear path: who must give notice, what relief is available, and when either side can walk away. A poorly drafted clause, or none at all, leaves the business relying on frustration, which rarely applies. Owners should review the clause in supply, construction, lease and service contracts before a crisis. Example: A Prince George manufacturer cannot ship orders for three weeks after a wildfire evacuation order closes its plant. Its supply contract lists wildfire and government orders as force majeure events, so after giving written notice within the stated five days, its delivery deadlines are suspended.

Risks and common mistakes

Assuming force majeure applies automatically when a contract has no such clause. Missing the clause's notice deadline or failing to give notice in the required form. Claiming force majeure because performance became more costly rather than prevented. Using a generic list of events that omits risks specific to the business, such as supply chain failures or cyber attacks. Failing to take reasonable steps to mitigate or work around the event.