By Obiter07
This really happened. During one transaction, one party requested that we delete the reference to “acts of God” in the contract. Being a believer, he was apparently of the opinion that there should be no reason why the Deity’s name should be invoked in vain in the agreement. That may be the correct view but this phrase is often used in agreements without any intention to blaspheme or disrespect.
“Acts of God” when used in the legal sense refers to force majeure events. As stated in the New Civil Code, a party is generally freed from liability in the case of force majeure or fortuitous events:
“ART. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable.”
Typically, this refers to storms, earthquakes, fires or other cataclysmic events.
But the foregoing is subject to exceptions as when the law or an express stipulation so provides. Or when the nature of the obligation itself requires the assumption of risk such as in a contract of insurance:
“ART. 1262. An obligation which consists in the delivery of a determinate thing shall be extinguished if it should be lost or destroyed without the fault of the debtor, and before he has incurred in delay.
When by law or stipulation, the obligor is liable even for fortuitous events, the loss of the thing does not extinguish the obligation, and he shall be responsible for damages. The same rule applies when the nature of the obligation requires the assumption of risk.” [Underscoring supplied]
Nothing prevents the parties from stipulating what would constitute force majeure events to insure clarity. But if you are not sure, you can provide that the enumeration is non-exclusive. Due to recent developments, it is not far-fetched to include in the enumeration terrorist attacks or even catastrophic computer viruses which may prevent you from complying with your obligations.
Why is the enumeration important? It could make the difference between having to perform an obligation or being excused from doing so, without any liability whatsoever.
A sample force majeure clause in a contract reads as follows:
“When any Force Majeure, such as earthquake, typhoon, flood, fire, war or other unforeseen events of which the happening and consequences cannot be prevented or avoided, causes a direct effect on the fulfillment of this Agreement or the inability to fulfill the conditions of this Agreement, the party encountering the Force Majeure shall notify the other two parties in writing without any delay. Within fifteen (15) days thereafter the party encountering the Force Majeure shall provide the detailed information of the events constituting the same, giving reasons for the failure to fulfill, for partial failure to fulfill, or for deferring the fulfillment of the contract.
All parties shall, through consultations, decide whether to terminate this Agreement or to exempt part of obligations for implementation or whether to defer the execution of this Agreement according to the extent of the effects of events on the performance of this Agreement.”
Moreover, it can be stated that force majeure excuses compliance only if there is no contributory fault or negligence attributable to the defaulting party.
This Supreme Court has held that an occurrence qualifies as force majeure only if there is no negligence present.
“Accordingly, petitioners cannot be heard to invoke the act of God or force majeure to escape liability for the loss or damage sustained by private respondents since they, the petitioners, were guilty of negligence. This event then was not occasioned exclusively by an act of God or force majeure; a human factor - negligence or imprudence - had intervened. The effect then of the force majeure in question may be deemed to have, even if only partly, resulted from the participation of man. Thus, the whole occurrence was thereby humanized, as it were, and removed from the rules applicable to acts of God. REMMAN ENTERPRISES, INC. vs. COURT OF APPEALS, et al. [G.R. No. 125018. April 6, 2000.]”
The effect of force majeure events can range from suspension of the obligations to termination depending on the parties to the contract. Some contracts oblige the party invoking force majeure to only give notice of the same. Once it is no longer present, a party is again bound to comply with his contractual obligations.
When your back is against the wall and you are unable to deliver, the occurrence of a force majeure event which frees you from any liability could just make you say, “Thank God.” Believer or not.
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