Force Majeure and Its Impact on Contracts – Why Is It Worth Regulating?

Although the term “force majeure” appears in numerous legal acts, Polish legislation lacks its clear statutory definition. However, case law developed over the years, together with scholarly opinions, points to three key conditions that must be met for a given event to be considered an act of force majeure. These are:

• externality—no causal connection with either party to the contract; the event must be entirely independent of them,

• unforeseeability—the situation could not have been reasonably foreseen at the time of entering into the contract,

• impossibility of preventing the effects—no real possibility of avoiding the consequences of such an event through standard measures.

Classic examples of force majeure include catastrophic natural phenomena such as hurricanes, floods, fires, or earthquakes. It also encompasses actions of public authorities, such as expropriations or the introduction of a state of emergency, as well as events of significant social or political magnitude, e.g., wars, acts of terrorism, and riots. The COVID-19 pandemic has also been classified as a manifestation of force majeure.

What Are the Effects of Force Majeure on Contracts?

As early as 1971, the Supreme Court indicated that force majeure constitutes a general ground for excluding liability based not only on the principle of risk but also on the principle of fault. In other words, if, as a result of force majeure, an obligation—whether written or oral – is not performed or is improperly performed, the party will not be held liable for it.

If the consequences of force majeure have long been well established in case law, why regulate the matter in contracts at all? Practice shows that it is worth doing so, if only to avoid uncertainty and to accelerate response in crisis situations. In this context, two types of contractual provisions are of key importance: the force majeure clause and the material adverse change (MAC) clause.

Including a Force Majeure Clause in a Contract

It is advisable to ensure that every contract contains an appropriate provision on force majeure. The parties are free to define, within their legal relationship, what constitutes force majeure—they may specify precisely which events will be treated as vis maior and which will not. Importantly, a force majeure clause may not only refine the definition of this concept but also—within the principle of freedom of contract—limit or expand the debtor’s liability and establish additional legal safeguards in the event of non-performance or improper performance caused by extraordinary circumstances.

Force Majeure Clause – How to Draft It?

Provisions on force majeure are now commonly used, both in domestic and international contracts. Such a clause should precisely regulate how the occurrence of force majeure will affect the mutual rights and obligations of the parties. A well-drafted clause should include:

• Definition of force majeure—it is advisable to begin with a general description indicating the characteristic features (externality, unforeseeability, impossibility of prevention) and only then list specific examples, while taking local conditions into account. What may be extraordinary in one region (e.g., a strike) may be commonplace in another;

• Method of documenting the event—not every event will be publicly known, so it is worth specifying how the occurrence of force majeure should be confirmed;

• Determination of the effects on obligations—the clause should indicate which obligations are subject to relief due to force majeure and to what extent (e.g., only in the case of delays beyond a specified period);

• Rights of the parties – it is worth deciding whether the party affected by force majeure merely obtains exemption from performance or may also, for example, withdraw from the contract after a certain period;

• Notification obligations – it is important to specify the time and form of notifying the other party about the occurrence and cessation of force majeure, taking into account realistic possibilities of acting in a crisis (e.g., the obligation to notify “promptly, when possible and without endangering safety”);

• Cut-off dates – for example, automatic cancellation of orders, termination of the contract after a certain time, or granting a right to withdraw from the contract.

The Material Adverse Change (MAC) Clause

Another frequently used mechanism—especially in transactional contracts—is the material adverse change (MAC) clause. Although it originates from common law, its use is also permissible under Polish law within the principle of freedom of contract.

The key features of this clause include

• The MAC clause applies mainly to contracts for the acquisition of assets or shares (e.g., in companies), where the parties provide for a transitional period between signing the preliminary agreement and the final agreement. This is particularly relevant in cases of company registration in Poland

• An event constituting a material change may include both force majeure-like situations (e.g., natural disasters) and other adverse internal circumstances, such as a factory fire caused by the owner’s negligence, a significant increase in raw material prices, or the loss of key customers.

• The purpose of the MAC clause is to ensure the possibility of renegotiating the terms of the contract or, if necessary, withdrawing from it. The clause is most often reserved for the benefit of the buyer or the financial institution funding the transaction.

What If the Contract Does Not Contain a Force Majeure Provision?

If no such provisions exist, the parties may attempt to renegotiate the contract. The problem arises when only one party bears the consequences of the event and loses the ability to act as an equal partner.

In such cases, it is possible to rely on general provisions, in particular Article 357¹ of the Civil Code – the so-called rebus sic stantibus clause. This provision states that if, due to an extraordinary change of circumstances, performance would involve excessive difficulties or threaten one party with a gross loss, and the situation was unforeseeable, it is possible to:

• modify the manner of performance,
• change the amount of performance,
• or even have the contract dissolved by the court.

It should be remembered, however, that in such cases the final decision rests with the court – which does not always have sufficient knowledge of the business realities of the case. Commercial litigation may be lengthy, and the judgment may be far from what the parties expected when signing the contract. Such a solution is certainly neither fast nor fully predictable.

Conclusions

Extraordinary events have been, are, and will continue to be present in business dealings. A recent example is the flood in Poland, but in recent years we have also experienced war and a global pandemic. This shows that including appropriate force majeure provisions in contracts should become a standard in contracting practice.

Inserting well-thought-out clauses into a contract allows the parties to clearly define the rules of conduct in crisis situations, provides greater flexibility, and protects their interests without involving the courts. It is also an element of responsible risk management – especially in a business environment where flexibility and speed of response are of key importance. For professional support in drafting contracts and risk management, you can rely on law firm in Poland – https://www.dudkowiak.com/.