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Bridge Collapses and Contractual Uncertainty: Navigating Force Majeure
Tuesday, March 26, 2024

In the aftermath of a catastrophic event, such as the Francis Scott Key Bridge collapse, the immediate focus rightfully rests upon the human toll and the urgent need for rescue, recovery, and support. However, amidst these pressing humanitarian concerns, it is important to recognize the concurrent commercial implications that arise from such tragedies. The disruption to shipping and logistics triggered by this disaster requires careful attention, as businesses grapple with the practical challenges and legal complexities of navigating force majeure clauses.

Understanding Force Majeure Provisions

Force majeure clauses are designed to allocate responsibility for events beyond a party’s control, excusing performance when such events delay or prevent it. Whether a shortage of parts due to shipping delays resulting from a port closure warrant invoking a force majeure clause depends on contractual language and specific circumstances. In the absence of such a clause, jurisdictional laws or common law principles may offer similar remedies.

Force majeure clauses vary widely in content and scope. Some enumerate specific qualifying events, while others adopt a broader approach encompassing any uncontrollable event. Given this variability, it is crucial for suppliers to seek legal guidance to assess the language of specific force majeure provisions.

Legal Considerations in Michigan

In Michigan, the defense of impossibility is narrowly recognized, particularly under the Michigan Commercial Code (MCC), which acknowledges the defense of impracticability concerning the sale of goods. Impracticability may excuse delayed or non-delivery of goods due to compliance with regulations or unforeseeable events. However, suppliers may not always rely on this defense, especially if the contract imposes greater obligations on them.

Notice Requirements

Invoking force majeure typically requires providing notice to the unaffected party, with varying requirements across contracts. Some contracts mandate notice within a specified timeframe from the event’s occurrence, while others stipulate prompt notification without specific timelines. Notices may need to detail the expected consequences and duration of the force majeure event, and failure to adhere to notice requirements can jeopardize a party’s claim.

Given the unpredictable impact of events like the Francis Scott Key Bridge collapse in Baltimore on supply chains, some suppliers may choose to issue proactive force majeure notices, acknowledging evolving disruptions and their implications for contract performance.

Mitigation Obligations

Even when an event falls under a contract’s force majeure provision, the affected party must take reasonable steps to mitigate foreseeable consequences. Failure to do so may undermine a force majeure claim, particularly if alternative means of fulfilling obligations were available.

Conclusion

It seems unlikely that a court would reject a force majeure argument for a surprisingly shocking event such as a container ship running into the Francis Scott Key Bridge. However, one should be aware that the inclusion of a force majeure clause in a Supply Agreement does not automatically mean if a catastrophic event occurs that your performance is excused.

The details of the event and the language of the force majeure clause can greatly impact your performance as well as the required performance your vendor/customer. If a supplier finds itself in a position where it is difficult to meet contractual obligations due to lack of a required product, it may be time to review supply contracts to understand its rights under a force majeure clause or other legal protections.

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