What it means
The idea is that people should not be held responsible for failing to do something when an overwhelming outside force makes it impossible. A shipping company that cannot deliver goods because a port has been destroyed by a storm has not broken its promise through carelessness.
Law and contracts therefore treat such events differently from ordinary business failures. Vis major is usually described as an event beyond human control, not foreseeable in time to prevent it, and not caused by the party relying on it.
The list often includes natural disasters, but depending on the contract it may also cover war, riots or government action. The exact wording matters, and courts read it narrowly.
In practice, businesses meet the concept in two main places. Contracts contain a clause that sets out which events excuse performance and what must be done, such as giving prompt notice.
Insurance policies may exclude or cover certain events, so a company must check whether a disaster is an insured loss or one it must bear itself. The financial impact can be large.
If a supplier is excused from delivering, the customer may have to buy elsewhere at a higher price and absorb the difference. Companies should therefore model scenarios where a key supplier or customer claims relief, and keep contingency plans.
Not every disruption qualifies. A rise in prices, a strike by the company's own staff or a downturn in the market is generally treated as a business risk, not an excusing event.
The party claiming relief must usually show that it did everything reasonable to limit the damage. Because the law differs between countries and the wording of contracts differs between deals, it is worth taking legal advice before relying on or resisting such a claim.
A short call with a lawyer early on is far cheaper than a dispute later.
In practice
Real-world examples.
Example
A food importer cannot receive a shipment of $200,000 of goods because an earthquake closes the port for three weeks. The contract with the supplier contains a clause for events beyond reasonable control, so the supplier is not liable for the delay but must give notice and resume as soon as it can.
Example
A concert promoter cancels an outdoor festival after authorities order an evacuation because of floods. The event insurance policy covers cancellation due to severe weather, and the finance team files a claim for the lost ticket revenue and committed costs. The insurer asks for the ticket sales records and the supplier contracts before it agrees to pay.
Example
A construction firm tells a client that building work is delayed because of a nationwide strike by its own employees. The client rejects the claim, since a strike by the contractor's own staff is generally not an event outside its control. The firm must either pay the agreed penalty for late completion or negotiate a revised date.
Case study
Seen in the real world.
Calloway Textiles is an illustrative, fictional manufacturer that buys cotton from a single supplier in a coastal region. A severe storm destroyed the supplier's warehouse, and the supplier informed Calloway that it could not deliver for two months and relied on its contract clause.
Calloway's finance director checked the clause, which listed storms and floods as excusing events. Since the supplier had given prompt notice and could show its warehouse was destroyed, Calloway accepted that it could not claim damages.
In this illustrative case, the company bought emergency stock from another supplier at a premium of $60,000 and then reviewed its supply risk. It added a second approved supplier to its contracts, and it checked its insurance for cover against interruption caused by a supplier's loss.
Watch out
Common mistakes.
- Assuming that any disruption counts, when ordinary business risks like price rises or staff strikes usually do not.
- Relying on a general phrase without reading the specific list of events and notice requirements in the contract.
- Assuming insurance will cover the loss, when policies often exclude certain events or require specific extensions.
Questions
People also ask.
Is vis major the same as force majeure?
They are closely related, with force majeure being the French term that is normally used in written contracts, while vis major is the older Latin phrase often used in legal discussions.
What is an act of God?
It is another traditional phrase for a natural event outside human control, and it often overlaps with vis major.
Does the affected party still have to do anything?
Usually yes, because contracts typically require notice, reasonable efforts to reduce the damage and a return to performance once the event ends.
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