The COVID-19 pandemic brought force majeure clauses from the back pages of business contracts to the front pages of legal disputes. Energy companies, construction contractors, commercial landlords, and event venues across Houston, The Woodlands, Katy, and the broader Houston metro found themselves arguing about what these provisions actually meant. Now that the immediate crisis has passed, the lessons remain highly relevant to any business that negotiates contracts in Texas.
What Is a Force Majeure Clause?
A force majeure clause is a contractual provision that excuses one or both parties from their performance obligations when an extraordinary event outside their control makes performance impossible, impractical, or illegal. The term comes from French and translates roughly as “superior force.” In practice, these clauses appear in commercial leases, construction contracts, supply agreements, oil and gas contracts, and virtually every other significant business arrangement.
A typical force majeure clause in a Texas commercial contract might excuse nonperformance due to acts of God, fires, floods, hurricanes, earthquakes, government actions, labor strikes, acts of terrorism, or wars. Some clauses go further and specifically list pandemics, epidemics, or public health emergencies. Others use broad catch-all language such as “any event beyond the reasonable control of the affected party.”
Texas Does Not Imply Force Majeure
One of the most important things to understand about force majeure under Texas law is that courts do not apply it unless the contract specifically includes it. Texas courts have repeatedly held that there is no common law force majeure doctrine that a party can invoke in the absence of a contractual provision. If your contract does not contain a force majeure clause, there is no force majeure defense to non-performance. The inquiry does not even begin.
This distinguishes Texas from some other states and is a practical argument for including force majeure language in every commercial agreement negotiated in the Houston area. In the absence of a force majeure clause, the only available defenses based on extraordinary circumstances are the common law doctrines of impossibility of performance, commercial impracticability, and frustration of purpose, which Texas courts apply narrowly and with significant skepticism.
How Texas Courts Interpret Force Majeure Clauses
When a force majeure clause does exist, Texas courts construe it strictly and narrowly. The specific language of the clause controls everything. Courts will not rewrite the contract or add protections the parties did not specifically negotiate.
The analysis typically follows a sequence. First, courts look at whether the event that prevented performance is specifically listed in the clause. If it is, and the other requirements are met, the clause likely applies. Second, if the event is not specifically listed, courts examine whether any catch-all provision covers it. Texas courts limit catch-all language to events that are similar in nature to those specifically listed, a rule of interpretation known as ejusdem generis. A catch-all like “any other event beyond the party’s reasonable control” does not swallow the entire clause to cover events the parties never contemplated.
Third, Texas courts generally require that the event be unforeseeable. Events that were clearly foreseeable when the contract was signed are expected to be addressed in the contract if the parties want protection from them. The Texas Court of Appeals in TEC Olmos, LLC v. ConocoPhillips Co. held that oil market price fluctuations were foreseeable as a matter of law and could not trigger force majeure relief. If Houston-area businesses could foresee the type of disruption when signing the contract, they had an opportunity to address it, and their failure to do so typically means they bear the risk.
Fourth, notice requirements are strictly enforced. Most force majeure clauses require the party claiming the protection to provide written notice to the other party within a specified time after the event occurs. Failure to give timely notice in the required form can bar the claim entirely.
What Force Majeure Does and Does Not Do
Force majeure typically suspends or excuses performance obligations for as long as the force majeure event continues. It does not permanently terminate the contract, and it does not generally entitle the claiming party to additional compensation for its own losses caused by the event. When the event ends, obligations resume.
The clause does not excuse performance that merely became more expensive or economically disadvantageous. Texas courts have consistently held that a force majeure clause is not a safety valve for parties who made a bad deal and are now unhappy with market conditions. The event must have made performance genuinely impossible or significantly impractical, not just more costly.
Commercial tenants who tried to invoke force majeure to avoid rent payments during the pandemic found that most Texas courts were skeptical. Rent payment is generally considered a monetary obligation that force majeure clauses, as traditionally written, do not cover unless the clause specifically addresses it.
What to Include in a Well-Drafted Force Majeure Clause
For businesses negotiating contracts in Houston, Stafford, Richmond, and surrounding communities, a well-drafted force majeure clause should include a specific list of covered events, clearly written to include the types of events your business is actually exposed to. For energy contracts, government orders and supply chain disruptions matter. For event businesses, health emergencies and gathering restrictions are critical to address. The clause should define what constitutes an affected party’s inability to perform, set a clear notice timeline, specify the geographic scope of the event, address what happens when performance is delayed versus permanently impossible, and state who bears the cost of the delay.
For more on the broader topic of breach of contract and your legal options when performance fails, see our article on when you can sue for breach of contract and our guide on understanding material breach versus minor breach.
For help analyzing or drafting a force majeure clause in your Texas business contracts, Anunobi Law can provide guidance tailored to your industry and circumstances. The information in this article is for general educational purposes only. Specific force majeure analysis depends heavily on the exact contract language and facts involved, and you should consult a qualified Texas attorney for advice on your situation.