How to address the absence of liability provisions in force majeure

In contractual relationships, a party’s failure or delay in performing its obligations typically leads to liability for damages or the imposition of legal sanctions. However, in practice, many breaches do not stem from the fault of either party but rather from force majeure such as natural disasters, epidemics, wars, or administrative decisions issued by the State. It raises an important question: where a contract contains no specific provisions governing liability in the force majeure, how should the resulting legal consequences be resolved?

I. Common legal risks associated with the absence of liability provisions in force majeure 

During the formation and performance of contracts, the failure to clearly stipulate the parties’ responsibilities in the force majeure is a common oversight, particularly in commercial, construction, service, or long-term investment agreements. The absence of liability provisions in force majeure may lead to significant legal risks, including:

• Difficulty in determining obligations and liabilities when a force majeure occurs: Without explicit provisions, parties often lack clarity as to who takes the consequences when performance is delayed or rendered impossible. It may lead to blame-shifting, disputes, and claims for damages, while statutory provisions remain general and difficult to apply to specific cases.
• Risk of being deemed in breach despite the absence of fault: A party may be accused of non-performance even where the cause arises from objective events such as natural disasters, war, epidemics, or governmental policies. In the absence of an exemption clause, the affected party may still be considered in breach and subject to damages or contractual sanctions. 
• Difficulties in proving the occurrence of a force majeure: Where no prior provisions exist, parties often fail to establish evidentiary mechanisms or notification procedures. It complicates the determination of whether an event qualifies as force majeure, especially where such events are not clearly listed or supported by valid documents.
• Impact on financial rights and obligations: The lack of clarity may disrupt payment obligations, delivery, or continued performance without a sound legal basis, causing significant financial losses to one or both parties, particularly in high-value contracts.
• Increased likelihood of disputes and litigation: In the absence of clear contractual provisions, parties must rely on general provisions of the Civil Code or Commercial Law, which are inherently broad and subject to interpretation. It often results in conflicting views, prolonged dispute resolution, and potential recourse to courts or arbitration.

II. Understanding the absence of liability provisions in force majeure situations

1. May the parties agree on liability in force majeure?

Pursuant to Clause 2, Article 351 of the Civil Code 2015, a party that fails to properly perform its obligations due to a force majeure shall not take civil liability, unless otherwise agreed or provided by law.

Accordingly, the law prioritizes party autonomy in such circumstances. The parties are fully entitled to agree on the definition of force majeure as well as the manner in which consequences are addressed. Such agreements may include full exemption from liability, suspension of obligations, extension of contractual deadlines, or termination of the contract without sanctions.

2. Does the absence of liability provisions in force majeure affect the parties’ interests?

The absence of such provisions directly affects the legal interests of both parties, particularly in determining which party is exempt from liability and which takes the loss.

• For the affected party: There is a risk of being deemed in breach despite objective causes, resulting in contractual sanctions or liability for damages.
• For the other party: In the absence of clear provisions, it may be difficult to claim damages or compel continued performance, thereby disrupting the balance of interests.

Current legal provisions (Articles 351 and 352 of the Civil Code 2015) establish only general principles and do not provide detailed guidance on the extent of exemption or methods of handling such situations. Accordingly, in the absence of agreement, the parties’ rights are exposed to risks and depend largely on the interpretation of the dispute resolution authority.

3. What types of events are considered force majeure in the absence of contractual provisions?

Clause 1, Article 156 of the Civil Code 2015 defines that a force majeure occurs objectively, is unforeseeable, and cannot be remedied despite the application of all necessary and possible measures.

Accordingly, even in the absence of contractual provisions, the following events may be recognized as force majeure if they satisfy the above conditions:

• Natural disasters such as fires, floods, droughts, earthquakes, storms, or landslides;
• War, riots, strikes, or large-scale epidemics (e.g., COVID-19, SARS);
• Acts of state authorities, including export-import bans, lockdowns, land recovery, or embargoes;
• Technical failures or global supply chain disruptions beyond the parties’ control.

However, to qualify as force majeure, the parties must still establish a causal relationship between the event and the inability to perform obligations. Failure to do so may result in the event not being recognized as force majeure, thereby precluding exemption from liability.

III. Relevant legal provisions governing the absence of liability in force majeure situations

1. Is it possible to request the counterparty to supplement force majeure provisions?

Under the principle of freedom of contract as recognized in Articles 3 and 421 of the Civil Code 2015, parties are entitled to request amendments, supplements, or renegotiation of contractual terms, including the addition of force majeure clauses.

In practice, such amendments are commonly made when:

• The parties wish to clarify circumstances leading to exemption from liability;
• Changes in economic conditions, policies, or market risks raise concerns regarding performance;
• The contract is long-term (e.g., lease, construction, investment), requiring updated provisions to reflect practical realities.

Where such provisions are absent, the parties should execute an addendum specifying: (i) qualifying force majeure, (ii) notification procedures, (iii) legal consequences, and (iv) termination rights in the event of prolonged occurrences.

2. What consequences may arise for enterprises in the absence of such provisions?

In the absence of specific provisions, enterprises may face substantial legal and financial risks, particularly in high-value commercial contracts, including:

• Being held liable for breach of contract even where the cause is objective (Article 351 of the Civil Code 2015 provides that obligations must still be performed unless force majeure is proven);
• Inability to obtain exemption or mitigation of liability, as statutory provisions set out only general principles;
• Difficulties in proving force majeure, thereby losing the opportunity for lawful exemption or termination;
• Damage to reputation, finances, and business relationships where the counterparty initiates claims or terminates the contract.

Thus, the absence of force majeure provisions not only complicates dispute resolution but also reduces the enterprise’s ability to manage legal risks in long-term or international transactions.

3. What should be done if the contract lacks force majeure provisions?

Where a contract has already been executed without such provisions, the parties may still address the situation based on applicable laws:

• Applying Articles 156 and 351 of the Civil Code 2015 to determine whether the event qualifies as force majeure;
• Invoking Article 420 of the Civil Code 2015 on “performance of contracts under fundamentally changed circumstances” to request renegotiation where performance becomes excessively onerous;
• Referring to Article 294 of the Commercial Law 2005, which provides for exemptions from liability in commercial activities, including force majeure;
• Issuing prompt formal notice to the counterparty to demonstrate good faith and mitigate losses.
• Where disputes cannot be resolved through negotiation, parties may submit the matter to commercial arbitration or courts for determination of force majeure status and corresponding exemption from liability.

IV. Questions regarding the absence of liability provisions in force majeure situations

1. What clauses should be included in contracts to avoid the absence of force majeure provisions?

To avoid such situations, contracts should include a force majeure clause specifying:

• Events deemed to constitute force majeure (natural disasters, war, epidemics, legal changes, etc.);
• Procedures for notification and confirmation;
• Legal consequences (suspension, extension, exemption, or termination);
• Obligations to mitigate damages.

Such provisions help minimize disputes and clearly allocate responsibilities.

2. How can the rights of an affected party be protected in the absence of such provisions?

The right to exemption from liability applies to the breaching party affected by force majeure, not to the injured party. Relevant provisions include:

• Article 351 (exemption from liability in force majeure);
• Article 420 (performance under fundamentally changed circumstances).
• The affected party may request a court or arbitral tribunal to recognize the event and consider contract adjustment, suspension, or termination to ensure fairness.

3. What types of safeguards may be applied in the absence of liability provisions in force majeure situations?

Enterprises may adopt several measures to mitigate legal and financial risks, including:

• Business risk insurance or business interruption insurance to compensate for losses caused by force majeure;
• Contingency arrangements set out in contract appendices, establishing mechanisms for suspension or extension of obligations upon the occurrence of unforeseen events;
• Third-party guarantee commitments to minimize losses in cases where contractual performance is disrupted.

4. Who makes the final decision in the absence of such provisions?

Where parties cannot reach agreement, courts or commercial arbitration bodies have jurisdiction to make final determinations based on evidence, including whether the event qualifies as force majeure and the extent of liability exemption.

5. Is it possible to claim future damages in such cases?

As a general rule, force majeure does not lead to liability for damages. However, if a party fails to mitigate losses or to timely notify the other party, it may still be liable for damages arising from its own fault.

Therefore, proper management and timely notification of force majeure are critical to avoiding future legal liability.

V. Are you looking for a reputable lawyer to assist with issues related to the absence of liability provisions in force majeure situations?

In complex contractual disputes, particularly where force majeure clauses are absent, engaging an experienced lawyer in civil and commercial contracts can assist enterprises in:

• Assessing whether an event qualifies as force majeure;
• Drafting, supplementing, or negotiating robust force majeure clauses;
• Representing clients in negotiation, mediation, arbitration, or litigation.

A skilled lawyer not only helps prevent risks at the contract formation stage but also minimizes losses and protects legal standing in the event of disputes.

If you are facing issues related to the absence of liability provisions in force majeure situations, please contact NPLAW for timely support to avoid prolonged risks and damages.