Legal Informer: Effects of Force Majeure: Exxon Mobil
Due to industrial action by Exxon Mobil’s in-house workers’ union, the company announced a force majeure on lifting oil from various terminals within the country on 17 April 2023. This is a result of the ongoing industrial action by the company’s in-house workers union.
Force majeure is a legal term that refers to an event or circumstance that is beyond the control of the parties involved in a contract and that makes it impossible or impractical for one or both parties to fulfil their obligations under the contract. Examples of force majeure events may include natural disasters, war, acts of terrorism, government actions, or labour strikes. In such cases, the affected party may be excused from performing its obligations under the contract or may be entitled to suspend or terminate the contract, depending on the specific terms of the agreement and the governing law. Contracts often include force majeure clauses to allocate the risks associated with such events between the parties.
The Court of Appeal in the case of Globe Spinning Mills (Nig) Plc. V Reliance Textile Industries Ltd (2017) LPELR-41433(CA) defined Force Majeure as “something that is unexpected and unforeseen happening, making nonsense of the real situation envisaged by parties.” In the earlier case of C.G.G. (Nig) LTD V Augustine & Ors (2010) LPELR-8592(CA), the Court of Appeal relied on the definition in Black’s Law Dictionary, 8th edition, where force majeure is defined as an event or effect that can neither be anticipated nor controlled. It includes both natural and human acts. The human acts may be political, including riots, strikes or war.” The effect of force majeure on a contract depends on the specific terms of the contract and the applicable law.
Generally, a force majeure event may excuse one or both parties from performing their obligations under the contract, either temporarily or permanently. In some cases, a force majeure clause may provide for the suspension of the contract for a certain period of time, allowing the parties to resume their obligations once the event has ended. Alternatively, the clause may provide for the termination of the contract if the force majeure event persists for a certain period of time, then the contract will be said to have been frustrated.
In the case of Onuigbo V Azubuike (2013) LPELR-22796 (CA), the court posited where “frustration of contract established or proved, the question of breach of the contract does not arise as none of the parties can be held responsible for the occurrence of the frustrating event or circumstances.”
If a force majeure event occurs and there is no force majeure clause in the contract, the affected party may still be excused from performing its obligations under the contract under the doctrine of frustration of purpose or impossibility of performance, depending on the applicable law. In any case, the effect of force majeure on a contract will depend on the specific facts and circumstances of the situation, and it is important to carefully review the terms of the contract and seek legal advice to understand the rights and obligations of the parties.
In conclusion, a company seeking to rely on force majeure to excuse itself from performing
contractual obligations must ensure that it adheres fully to any procedures regarding the issuance of force majeure notices as provided for in the commercial agreement. In addition, the company should take reasonable steps to mitigate any effects of the force majeure event, where possible. If the company fails to do so, it may not be successful in relying on force majeure as a defence for non-performance.