International Business Law

International Business Law « Imprévision », Force Majeure, Act of god and Hardship. Subjects : Group members : JOAO Christian and Allan KOUADRI

International Business Law • « Imprévision » Allan • The Force Majeure case Allan • The « Act of God » Christian • Hardship clause Christian Plan :

1. « Imprévision » Definition of the French law Unexpected upheaval of a contractual balance which returns fulfillments abnormally expensive for stake holders. In administrative law, this unexpected event causes the revision or the cancellation of the contract. That does not produce a full right in French private law but only in administrative law: “Canal de Craponne” judgment, 1876.

1. « Imprévision » The theory of “Imprévision” • The theory of “Imprévision” was fixed in the judgement "Compagnie générale d'éclairage de Bordeaux" of the “Conseil d’Etat” of March 30 1916. • It is base on the general interest. • The event must be exterior of the stake holder’s will.

1. « Imprévision » The theory of “Imprévision” • It must be abnormal and unforeseeable at the time of the contract signature. • As its effect is temporary, it does not constitute a case of Force Majeure which would end the contract. • It can be caused by a sudden economic evolution or the intervention of something exterior, it envisages a partial and no integral compensation.

1. « Imprévision » What says the “jurisprudence” • The case « Compagnie générale d'éclairage de Bordeaux » • Supplier of Bordeaux for street lightning. • Price multiplied by 5 completely unforeseeable at the time of the signature of the concession contract.

1. « Imprévision » What says the “jurisprudence” • Consequences of the judgment : • The “Conseil d’Etat” considered that, although the dealer had normally to assume prices variations of raw materials, which constituted a risk of the contract, this coal price rising was completely unforeseeable and external. • Thus they decided that the company had to ensure the execution of the service, but also that the Town of Bordeaux had to compensate financially the company.

2. Force Majeure Definition Is a common clause in contracts which essentially frees one or both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as war, strike, riot, crime, act of God, prevents one or both parties from fulfilling their obligations under the contract. Force Majeure cannot excuse negligence or malfeasance of a party, as non-performance is caused by natural consequences of external forces.

2. Force Majeure 3 Principles • Exteriority : stakeholders have nothing to do with the event. • Unpredictability : if one could envisage the event, it had to be done. It is a fault of not having done it. The judge is very strict judging reasons of administrations: the storm was exceptional, it is beyond control FM; the storm was announced by meteorologist No FM. • Irresistibility : it was impossible to do anything

2. Force Majeure Sample of Force Majeure clause "Any Party asserting Force Majeure as an excuse shall have the burden of proving that reasonable steps were taken (under the circumstances) to minimize delay or damages caused by foreseeable events, that all non-excused obligations were substantially fulfilled, and that the other Party was timely notified of the likelihood or actual occurrence which would justify such an assertion, so that other prudent precautions could be contemplated."

2. Act of God • Extraordinary and unexpected natural events outside of human control : hurricane, storm, floods, earthquake... • No one can be held responsible Definition

In the law of contracts An "act of God" may be interpreted as an implied defense serves as an excuse of the inability to fulfill duties indemnification : an act of God may be no excuse, and in fact may be the central risk assumed by the promisor In the law of torts an “act of God” may be asserted as a type of intervening cause, the lack of which would have avoided the cause or diminished the result of liability Theory and application

4. Hardship Changes the contractual equilibrium in such a dramatic way performance can become ruinous cannot reasonably be expected. Definition

Application • hardship is at stake where the performance of the disadvantaged party become burdensome • In hardship situation the contract can be modified • In a hardshipclause it is important to stipulate when and how the parties will rearrange the contract

International Business Law