Navigating Economic Uncertainty: What Companies Need to Know About Force Majeure Clauses Under Quebec Law

Navigating Economic Uncertainty: What Companies Need to Know About Force Majeure Clauses Under Quebec Law

With rising economic uncertainty fueled by potential U.S. tariffs on Canadian goods, organizations are increasingly looking to their contracts for risk mitigation strategies. Can the force majeure clause come into play in such circumstances?

Under Quebec law, force majeure clauses can relieve parties from contractual obligations when unforeseen and uncontrollable events occur.

This bulletin explores what constitutes force majeure events under Quebec law, how it applies, and what organizations should consider in the context of a business-to-business relationship.

1. What Constitutes a Force Majeure Event Under Quebec Law?

Under Quebec law, article 1470 of the Civil Code of Quebec (“CCQ”) states:

“A person may free himself from his liability for injury caused to another by proving that the injury results from superior force, unless he has undertaken to make reparation for it.

Superior force is an unforeseeable and irresistible event, including external causes with the same characteristics.”

Thus, the CCQ expressly allows an organization to be released from its contractual obligations when a force majeure event (or superior force) that is both unforeseeable and irresistible occurs. In other words, for an event to qualify as force majeure, it must be beyond the control of the affected party, impossible to anticipate at the time of contract formation, and incapable of being overcome.

2. Two Scenarios When a Party Can Invoke Force Majeure

Under Quebec law, an organization may invoke a force majeure event to seek relief in performing its contractual obligations mainly in two scenarios:

1. the parties have expressly agreed to a force majeure clause in their contract providing for a mutually agreed relief in the event a force majeure event occurs; or
2. if the contract is silent with respect to force majeure events, the affected party may invoke the application of the CCQ and seek relief to suspend or terminate its obligations.

The parties to a commercial contract are free to negotiate the terms of a force majeure clause to suit their needs, namely its scope, the triggering events, and the consequences of the occurrence of a force majeure event. If the parties expressly agree to the terms of a force majeure clause in their commercial agreement, the terms of that clause will prevail between them. As a result, the application and scope of a force majeure clause will be interpreted by the courts based on contract law rules of interpretation.

On the other hand, if the contract is silent and does not contain a force majeure clause, article 1470 of the CCQ can apply. In such cases, the party invoking a force majeure event bears the burden of proving that its contractual obligations must be extinguished or suspended due to the occurrence of an unforeseeable and irresistible event.

3. How to Assess the Force Majeure Event

i. Diligent and Prudent Person

At the outset, the assessment of a force majeure event is conducted from the perspective of a reasonably diligent and prudent person placed in the same circumstances as the parties. In other words, a party affected by a force majeure event must be able to demonstrate that any other reasonable and prudent person in the same circumstances would also not have been able to fulfill its obligations due to the force majeure event. It would not be enough for the affected party to demonstrate that it was unable to perform its obligations on a personal basis.

ii. Unforeseeable Event

To interpret a force majeure clause or determine whether an event qualifies as force majeure under the CCQ, courts analyze the circumstances at the moment the contract was formed. As a result, the foreseeability of the force majeure event will be assessed at the moment when the contract was formed. If the event alleged was reasonably foreseeable at that time the contract was formed, the Quebec courts will not qualify the event as a force majeure event.

iii. Irresistible Event

When assessing irresistibility of an event, the Quebec courts evaluate whether the effects of the event were insurmountable and whether its occurrence was inevitable. For an event to be considered irresistible, there must be an absolute impossibility for performance, not just increased difficulty or cost on the affected party. Based on this interpretation, any obligation that becomes more onerous or exceptionally difficult to perform will not satisfy the irresistibility criterion under the CCQ.

iv. External Event

Also, the courts will assess the externality of the event. Essentially, a party affected by a force majeure event can be released from the performance of its obligations under the contract when the event was entirely external to the party in question. In other words, the force majeure event must not be caused by an act or fault attributable to the affected party or in some way influenced by the same.

4. Exceptions to the Release of Obligations Due to Force Majeure

There are two main exceptions to the force majeure rule set out in article 1470 of the CCQ. The first exception is when the affected party has contractually agreed to assume the risks or losses in the event of force majeure. In such a scenario, the affected party will not be able to later invoke the exemption under article 1470 of the CCQ.

The second exception to the rule is when a party is already in default of performing its obligations when the force majeure event occurs. In this case, the other party may demand specific performance of the obligations or if the performance has become impossible, performance by equivalence. However, it’s worth noting that this exception is itself subject to an exception.

5. How Have Quebec Courts Interpreted Force Majeure?

Quebec courts apply strict criteria when evaluating force majeure events. To successfully invoke a force majeure event, a party must demonstrate the conditions of externality (i.e., the event is not attributed to the affected party), unpredictability, irresistibility, and absolute impossibility of performing the obligation. Furthermore, the affected party must also demonstrate that it could not have prevented the force majeure event as it was entirely outside of its control.

Quebec courts have accepted force majeure claims in cases where government-mandated closures (e.g., COVID-19 shutdowns) made contractual performance impossible. However, courts have also ruled that market fluctuations, price increases in raw materials, and unfavorable foreign policy changes do not necessarily constitute force majeure. While disruptive, these circumstances do not render performance absolutely impossible.

The topic of force majeure has gained renewed interest in the context of recent economic uncertainties with the United States, particularly relating to the sudden imposition of tariffs significantly affecting different industries. Can a party suspend or terminate its obligations under a commercial contract in the event a sudden and unexpected tariff is imposed by a foreign government causing major disruptions in an industry? While we do not have a cookie-cutter response to this question, organizations should seek legal advice to assess their options and legal relief available to them under their contract or the CCQ.

Finally, and as mentioned earlier, a party already in default of its contractual obligations will have greater difficulty in successfully invoking force majeure.

6. Key Considerations When Negotiating a Force Majeure Clause

Fundamentally, a force majeure clause allows contracting parties to agree on what constitutes a force majeure event, when it is triggered, and how risk is allocated between the parties. Although force majeure clauses can vary significantly in scope and complexity, here are certain elements to consider:

i. Triggering Event

The clause should clearly define which events excuse contractual performance. Some contracts adopt a general definition aligned with the CCQ, while others list specific events (e.g., natural disasters, pandemics, government actions, war, labor strikes). Organizations have the flexibility to agree on the scope of triggering events and should carefully consider the type of events they would like to trigger the application of the force majeure clause.

ii. Impact of the Triggering Event

The clause should specify the extent to which an event must impact contractual performance. Under Quebec law, performance must become impossible, not merely more difficult or costly. However, parties may contractually agree to a lower threshold. The clause may also include a mitigation obligation, requiring the affected party to take reasonable steps to minimize the impact.

iii. Specific Carveouts

The parties are free to exclude or limit the application of the force majeure clause. Some contracts explicitly exclude financial hardship, regulatory changes, or labor shortages from qualifying as force majeure. Depending on the nature of the contract, the industry, and the parties involved, organizations may find it useful to exclude certain events from the definition of a force majeure event to ensure the contractual obligations are performed notwithstanding the occurrence of such event.

iv. Notice Requirements

Many force majeure clauses require the affected party to provide a timely notice to the other party once a force majeure event occurs. Failure to provide notice could limit or bar the affected party from seeking relief. The clause should specify the required form of notice (e.g., written notice, email, registered mail, etc.) and whether updates are required if the event continues. It is best practice to include a description of the event, its impact, the expected duration, and mitigation efforts, among other details.

v. Duration of Force Majeure Events

The clause should address what happens if a triggering event persists beyond a reasonable period. Some contracts allow for temporary suspension of obligations, while others provide termination rights if the event continues beyond a specified timeframe (e.g., 30, 60, or 90 days). Including clear termination rights can help mitigate uncertainty and reduce interpretation challenges in court.

7. Takeaways

In times of economic instability, organizations should carefully assess their contracts to determine whether their force majeure clauses can offer them viable relief. While Quebec law provides a default legal framework applicable to force majeure events, parties to a business-to-business commercial contract have the flexibility in drafting a contractual clause based on their unique needs and realities.

However, given the strict interpretation of force majeure clauses by the Quebec courts, organizations should seek legal advice to ensure their contracts provide adequate protection against unforeseen disruptions, such as government-imposed tariffs.

By understanding the application and scope of force majeure under Quebec law, organizations can proactively mitigate risks and navigate economic uncertainty with greater confidence.

by Amir Kashdaran

A Cautionary Note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2025