GIVEN THAT CONGRESS has not officially declared war on terrorism, would “war” be a valid reason for excusing the performance of a contract?

It depends on whether the war truly amounts to a force majeure, or a force beyond the control of the party, affecting performance of the contract adversely. A conflict between the U.S. and a foreign entity in another part of the world does not necessarily render performance of a meeting contract impossible by either party. The burden is on the party claiming force majeure to prove that the war has adversely affected its ability to perform the contract as anticipated.

The parties in a contract dispute are subject to the law of their jurisdiction, which varies depending on the specific facts of the case, the specific language in the contract, and the circumstances surrounding the alleged force majeure rendering performance impossible, illegal, or commercially impracticable. The best protection for a meeting planner is clear and specific contract language that anticipates events and defines terms.

Some cases from the World War II era and the conflict in Korea specify that a conflict is not a “war” in the absence of a declaration of war by Congress. While the cases deal primarily with insurance, a court of law may consider them when deciding a contract dispute case.

One case from the Korean conflict said that if the contracting parties wanted to clarify what they meant by “war,” they could have used the phrase “declared or undeclared war.” Obviously, this would still leave the applicability of the term to current events open to interpretation, but it does seem to open the door to a broader application of the term.

Another World War II case addressing the excuse of performance of a contract due to war explicitly says that war is bound to produce some economic losses that have to be sustained by one party or the other, so there is no reason to try to shift the burden. This basically means that the court will construe the contract language as it is written, with the understanding that the outcome is going to be less than favorable to one party or the other.

The sad truth is that recent and future events — terrorism, war, conflict, whatever you call them — are having an economic impact on the meetings industry. Unfortunately, either the meeting planner's organization or the hotel, or both, are being adversely affected by decreased meeting attendance. Meeting planners need to look carefully at their contract language, because force majeure language varies and the protection it offers varies along with the wording.

Tyra W. Hilliard, Esq.,(tyra@sumnerassociates.net) is an attorney with Atlanta-area Sumner & Associates, P.C.

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Clause and Effect: Dispute Resolution

Clause and Effect: Insurance

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