I was recently preparing a contract for one of my clients. While we were reviewing the force majeur clause, my client asked me to clarify in which instances an “Act of God” would apply. Despite seeing this term appear in hundreds of contracts, I never stopped to think what it actually meant. As such, to both humour my client and out of professional curiosity, I embarked on a quest to see how the law has defined an implemented provisions referencing Acts of God. By reading this rendition of Concrete Concepts, you get to join me on this journey.
Defining the Undefinable[1]
Also known in Latin as Vis Major, meaning “superior force”, the idea of an Act of God is one that is entirely out of control of the parties to the contract and caused by some significant exterior force.
For example, Black’s Law Dictionary defines Act of God as follows:
“An overwhelming, unpreventable event caused exclusively by forces of nature, such as an earthquake, flood, or tornado. The definition has been statutorily broadened to include all natural phenomena that are exceptional, inevitable, and irresistible, the effects of which could not be prevented or avoided by the exercise of due care or foresight”[2]
Similarly, Halsbury’s laws of England defines Act of God as follows:
“In the legal sense of the term, an Act of God may be defined as an extraordinary occurrence or circumstance which could not have been foreseen and which could not have been guarded against; or, more accurately, as an accident (1) due to natural causes, directly and exclusively without human intervention, and (2) which could not by any amount of ability have been foreseen, or, if foreseen, could not by any amount of human care and skill have been resisted. The occurrence need not be unique, nor need it happen for the first time; it is enough that it is extraordinary and such as could not reasonably have been anticipated.”
Both definitions focus on concepts of unforeseeability and a lack of prevention mechanisms. Various courts in Ontario and Canada have accepted these definitions and the focus on the act being an unusual occurrence which could otherwise not be reasonably anticipated.[3]
The bigger question also forms when considering what would differentiate an Act of God from a general natural disaster, such as a tornado or a windstorm. For example, in the McQullain v. Ryan case,[4] the Ontario Court of Appeal looked at a windstorm and determined that, although the resulting damage was devastating, it was in an area that experienced significant wind in the past, which could have allowed for some predictability. This treatment helps, then, differentiate between damage caused from natural disasters as opposed to unforeseeable circumstances.
Recent Treatment and Use of the Clause
Anyone who operated a business around March 2020 and ran into supply chain issues shortly thereafter ran into the force majeure question in determining whether COVID-19 was an Act of God. The Courts had an opportunity to review this question in two main cases:
- In Windsor-Essex Catholic District School Board v 231846 Ontario Limited,[5] the Ontario Superior Court had to determine whether a force majeure condition – containing the Act of God exception – would help a tenant be relieved of his responsibility to pay rent in a commercial lease agreement. In his case, the lease included a rent abatement clause in case of a force majeure incident. The Court determined that the COVID-19 limits constituted a force majeure occurrence that precluded the landlord from providing the tenant with the leasable space. As a result, the landlord was relieved of its contractual obligation to provide the rented space, and the tenant’s contractual rent obligation was alleviated.
- In contrast, the Superior Court in Porter Airlines Inc. v. Nieuport Aviation Infrastructure Partners GP[6] had to determine whether Porter Airlines could rely on its force majeure clause as a justification for reneging on its obligation to pay terminal fees for Billy Bishop Airport under its license agreement. Porter’s argument was that, as a result of COVID-19, its revenue generation was severely affected due to flying restrictions.
Contrary to Windsor-Essex, in determining whether the force majeure clause would apply, the Superior Court looked to determine whether Porter’s performance of the agreement was prevented due to direct restrictions of government laws and regulations ordering lockdown of facilities. Namely, whether Porter was precluded from actually fulfilling its contractual obligations due to an Act of God. The Court determined that, while Porter may have acted in a commercially reasonable way by suspending its operations, it did not amount to an impossibility for it to complete its contractual obligations. The ultimate determination resulted that, despite obligations becoming more expensive to perform, they did not relieve the party of its obligation on the ground of force majeure.
Conclusion
While the Act of God has not received the extensive analysis in law as it should have, one thing is clear: the Courts focus more on the unforeseeability and impossibility of action that follows to determine whether to nullify a contract based on an Act of God.
The foregoing is for informational purposes only and should in no way be relied upon as legal advice. If you have any further questions, or would like to schedule an appointment for legal advice tailored to your circumstances and business, please contact me at dan@fridmar.com.
[1] I had the pleasure of having my student, Soumyaa Sharma conduct some research in preparing this blog. “Defining the Undefinable” was her title, which I felt was too good not to include.
[2] Black’s Law Dictionary, 8th ed. (St. Paul, MN: Thomson West, 2004), Article 17.01.
[3] See Atlantic Paper v. St. Anne-Nackawic Pulp and Paper [1976] 1 S.C.R. 580 (SCC), Kilislian v Copper Creek GP Inc (cob Copper Creek Golf Club), [2015] OJ No 6327 (Ont. Sup. Ct.),
[4] (1921) 64 D.L.R. 482 at 348.
[5] 2021 ONSC 3040.
[6] 2022 ONSC 5922.
