A European technology company signs a long-term supply agreement with a US manufacturer. Two years later, a combination of port disruptions, new trade controls, and a major supplier's insolvency makes performance commercially devastating. The company's legal team turns to the contract – and finds that the force majeure clause lists seven specific events but does not mention supply chain collapse. The governing law is New York. The counterparty is threatening to file a statement of claim in federal court within weeks. The question is not whether the law provides relief. The question is whether the contract, as written, entitles this party to invoke it.
Force majeure and hardship in the United States are governed primarily by contract language, not by a uniform statutory code. US commercial law – spanning the Uniform Commercial Code (UCC), common law contract doctrines. Additionally. Federal civil procedure – provides several partial defences. This includes commercial impracticability and frustration of purpose. However, none of them imports a general renegotiation right. The outcome of any dispute turns heavily on the specific clause language, the chosen governing law, and the notice procedures the parties followed from the moment disruption began.
This analysis examines the doctrinal foundations of force majeure and hardship in the United States, the competing positions taken by courts in key commercial jurisdictions, the gap between what the statute says and what courts actually do. The strategic implications for international and cross-border clients. Additionally, the practical steps businesses should take now to protect their contractual positions.
Doctrinal foundations: where US law diverges from civil law tradition
The United States does not have a single national contract code. Commercial contract law is largely a matter of state law, shaped by the UCC for goods transactions and by common law for services, real estate, and mixed arrangements. This decentralised structure creates significant variation across jurisdictions. New York, Delaware, California, and Texas each apply subtly different standards to force majeure and related defences.
The starting point for any analysis is the distinction between force majeure as a contractual construct and hardship as a doctrinal defence. In civil law systems – including those of France, Brazil. Additionally. Portugal – hardship (imprévision or rebus sic stantibus) may entitle a party to demand renegotiation or judicial modification of the contract when circumstances change so fundamentally that performance becomes economically disproportionate. US common law takes a different path. It does not recognise a standalone hardship doctrine. Courts will not rewrite a contract merely because one party's expected profits have been destroyed.
Instead, US law offers three related but distinct instruments. First, the contractual force majeure clause – whatever the parties chose to write. Second, the doctrine of frustration of purpose, which applies when a supervening event destroys the entire commercial rationale for the contract. Third, commercial impracticability under commercial legislation, which excuses performance of a contract for goods when an unforeseen contingency makes performance commercially unreasonable. All three operate differently, carry different thresholds, and cannot be used interchangeably.
A client accustomed to civil law precedent systems will find that US courts place far greater weight on the literal text of the force majeure clause than on any background doctrine. The civil law practitioner's instinct – to argue that the spirit of the arrangement supports relief – carries little persuasive force before a US federal court or in a JAMS or AAA arbitration. The text governs. This is the first and most important insight for any international business entering a US commercial contract.
Under US commercial legislation, the impracticability defence is narrow by design. It applies to sellers of goods who face an unforeseen contingency that a reasonable person would not have assumed at contract formation. Price increases, currency movements, and general market downturns have consistently been held insufficient. Courts require that the contingency make performance not merely more expensive but genuinely impracticable in a commercially reasonable sense. This is a high threshold, and the overwhelming majority of impracticability claims are rejected.
Competing court interpretations and the gap between doctrine and outcome
The judicial record on force majeure in the United States reveals a clear pattern: courts in New York and Delaware – the two dominant commercial jurisdictions – read force majeure clauses with striking literalism. The principle of ejusdem generis (of the same kind) means that a catchall phrase at the end of a list is typically confined to events of the same character as those specifically enumerated. If the clause lists hurricanes, floods. Additionally, acts of war but not pandemics. A court applying New York law is unlikely to treat a pandemic as falling within a general "other events beyond the parties' control" provision.
This was precisely the contested territory across a wave of disputes arising from business disruptions in the early 2020s. US District Court decisions across multiple circuits addressed whether government-imposed shutdowns qualified as force majeure events under existing clause language. The results were mixed. Courts that found for the invoking party typically identified specific language – such as "government action" or "acts of governmental authority" – within the clause. Courts that rejected the defence pointed to the absence of such specific language and noted that the disruption did not make performance physically impossible, merely more expensive or commercially undesirable.
The frustration of purpose doctrine fared no better in most cases. Courts applying this doctrine require that the primary purpose of the contract – not merely the profitability of one side's position – has been entirely destroyed. A restaurant operator who closes due to a restriction, but whose lease continues to have some residual utility, will generally fail on frustration grounds. The commercial purpose must be wholly defeated, not merely impaired.
Practitioners note a recurring gap between how businesses understand force majeure in theory and how courts apply it in practice. Many companies assume that any severe external event will qualify. In reality, the clause must name the category of event, or describe it in language broad enough to encompass it. Courts apply the contra proferentem rule – construing ambiguous language against the drafter – but this only helps when genuine ambiguity exists. Poorly drafted catchall provisions are frequently narrowed by context.
Delaware corporate law adds a further dimension for entities structured as a Delaware LLC (limited liability company) or Delaware corporation. Delaware courts are particularly deferential to the express terms of commercial agreements. The Court of Chancery has emphasised that sophisticated commercial parties are presumed to have allocated risk deliberately through their contract language. Relief from that allocation requires more than a showing that circumstances changed.
The causation requirement presents a separate challenge. Even where the triggering event falls within the clause, the party invoking force majeure must show that the event was the proximate cause of non-performance. If the party was already in financial difficulty before the disruptive event occurred, courts will scrutinise whether the event – or the pre-existing condition – actually caused the failure to perform. This analysis can require detailed financial and operational evidence, turning what began as a contract interpretation dispute into a complex factual inquiry before a US District Court.
For clients engaged in or anticipating corporate disputes in the United States, understanding this causation dimension is essential before deciding whether to invoke force majeure or to seek another resolution path.
The notice trap and procedural dimensions of force majeure claims
One of the most consequential – and frequently overlooked – aspects of force majeure under US contract law is the notice requirement. Most well-drafted force majeure clauses require the invoking party to give written notice within a specified window after the triggering event occurs. This window is often set at 10, 14, or 30 days. Failure to give timely notice has been held in multiple jurisdictions to waive the force majeure defence entirely, regardless of whether the substantive conditions for relief were otherwise met.
This is not a technicality. It is a structural feature of US commercial litigation strategy. The counterparty's first response to a force majeure notice will frequently be to challenge the timeliness and adequacy of the notice itself. A notice that arrives three days late. Alternatively, that fails to identify the specific clause being invoked. Alternatively, that does not describe the nature of the event with sufficient particularity. Can be attacked before any court or arbitral tribunal. whether in a JAMS proceeding or an AAA arbitration. without engaging the merits of the underlying claim.
Under civil procedure rules applicable in federal court and most state courts, a party who has waived a contractual defence may face significant difficulty reintroducing it later in proceedings. The statement of claim filed by the counterparty will often allege breach of contract, and the force majeure argument will need to appear as a substantive defence in the responding pleading. If the notice was defective, this procedural dimension becomes the central battleground.
Businesses operating across the Americas face an additional complication. A Delaware LLC that is party to a contract governed by New York law. However, whose physical operations are in another state. May face questions about whether federal subject matter jurisdiction is available through diversity of citizenship. The rules governing court filing in US District Court, including the requirements for invoking federal jurisdiction, interact with the substantive force majeure analysis in ways that can determine which court ultimately hears the case.
Interim relief adds another layer. Where a party facing a force majeure dispute seeks to prevent the counterparty from terminating the contract or drawing on a letter of credit. An interim injunction. or in federal court terminology, a preliminary injunction – may be available. Courts apply a four-part test: likelihood of success on the merits, irreparable harm absent relief, balance of hardships, and public interest. The likelihood-of-success analysis will require the court to form a preliminary view on the force majeure argument itself. This means the merits of the clause interpretation arise at an early stage, often before full disclosure of documents.
The interplay between the injunction standard and force majeure doctrine means that early legal strategy matters enormously. A party that moves quickly, gives proper notice, documents its mitigation efforts, and files for interim relief in the right court can shape the entire litigation trajectory. A party that delays – even by a few weeks – may find that the contractual notice window has closed. The counterparty has terminated the agreement. Additionally, the only remaining path is a damages claim for wrongful termination.
Cross-border implications: Americas clients and the US contract environment
For businesses headquartered in Brazil, Mexico, Colombia, Chile, or Argentina that contract with US counterparties, the differences between civil law hardship doctrine and US force majeure practice carry concrete commercial risk. Civil law systems across Latin America generally recognise some form of the hardship principle. A Brazilian business accustomed to the possibility of judicial rebalancing under its domestic commercial legislation may enter a US-governed contract without appreciating that no equivalent right exists under New York law.
The consequences of this doctrinal gap become acute when disruption strikes. The Latin American counterparty may assume that good-faith renegotiation is both expected and legally supported. The US counterparty – particularly one incorporated in Delaware or New York – may take an entirely different view: the contract allocates risk; the risk materialised; performance is due. This divergence in expectations is one of the most common sources of cross-border commercial disputes in the Americas region.
Our analysis of force majeure and hardship in Brazil examines how Brazilian commercial legislation addresses changed circumstances and compares the available defences with those accessible under US law. For businesses operating on both sides of this relationship, understanding both systems is essential to structuring contracts and managing disputes effectively.
Securities-regulated entities face additional considerations. A company whose shares are listed. Alternatively, whose debt securities are registered. With the Securities and Exchange Commission (SEC) may have disclosure obligations when a force majeure event materially affects its ability to perform under key commercial agreements. These obligations arise under federal securities legislation and operate independently of the contractual force majeure analysis. Failure to disclose a material contract disruption in a timely manner can generate regulatory exposure alongside the commercial dispute.
For cross-border transactions involving US counterparties, the governing law and dispute resolution clause are the two most consequential drafting decisions. Choosing New York law imports the literalist approach described above. Choosing a more flexible standard. such as the UNIDROIT Principles of International Commercial Contracts. This do recognise a hardship concept. requires the parties to opt out of domestic law explicitly. This is not always possible depending on the nature and location of the transaction. JAMS and AAA arbitration rules do not themselves alter the substantive law; the arbitrators apply whatever governing law the clause specifies.
Judgment enforcement across the Americas adds a final cross-border dimension. A US judgment obtained in federal court against a Latin American entity will require separate recognition and enforcement proceedings in the defendant's home jurisdiction. The civil procedure rules of the relevant Latin American state will govern whether the judgment is enforceable. Additionally. The defences available to the judgment debtor may include arguments that the US proceedings did not comply with local procedural standards. This creates a strategic reason to prefer arbitration – with an award enforceable under the New York Convention – over domestic litigation in many cross-border force majeure disputes.
To discuss structuring your dispute resolution and force majeure strategy for cross-border Americas contracts, contact us at info@ferrazwhitmore.com.
Strategic recommendations and drafting priorities
The analysis above points to a set of concrete strategic priorities for businesses operating under US commercial contracts or entering into new ones. These recommendations apply whether the client is a US entity contracting with a foreign counterparty, or a foreign business contracting under US governing law.
Review existing force majeure clauses now. Do not wait for a disruption to discover that the clause does not cover the relevant category of event. The clause should enumerate specific categories of disruption relevant to the business – including supply chain failures, government-imposed restrictions, cyberattacks, and labour actions – rather than relying on a generic catchall. Broad catchalls are consistently narrowed by courts applying the ejusdem generis principle.
Draft the notice mechanism with precision. The notice provision should specify the form, recipient, timeframe, and required content of the force majeure notice. If the contract is silent on timeframe, the invoking party should give notice as promptly as commercially possible. Courts have shown little sympathy for parties who delayed notice because they were assessing the extent of the disruption.
Build in a renegotiation or hardship clause if the parties want one. US law does not imply such a right, but the parties may contract for it. A well-drafted hardship clause can specify the conditions under which either party may request renegotiation, the timeframe for those negotiations, and what happens if they fail – whether mediation, arbitration, or termination. Including such a clause is particularly valuable in long-term contracts where market conditions are likely to shift over the contract term.
Document mitigation efforts from day one. Courts and arbitral tribunals. whether in JAMS, AAA arbitration. Alternatively. Litigation before a US District Court. will scrutinise what the invoking party did to minimise the impact of the disruptive event. A contemporaneous record of mitigation steps – including communications with alternative suppliers, cost estimates for workaround solutions, and internal decision-making records – is far more persuasive than a post-hoc reconstruction prepared for litigation.
For existing disputes, early legal assessment is essential. The window for giving notice may still be open, or may have recently closed. Understanding the precise status of all procedural deadlines – including court filing deadlines and arbitration commencement periods – is the first task for any legal team handling a US force majeure dispute. Businesses that engage counsel after the notice window closes face a significantly narrowed set of available arguments.
The interaction between force majeure and related instruments – including termination for convenience clauses, material adverse change provisions, and price adjustment mechanisms – should also be assessed. In many commercial contracts, these provisions can achieve some of the same economic outcomes as force majeure without requiring the party to satisfy the strict causation and foreseeability thresholds that courts apply to force majeure defences.
Clients who need litigation and arbitration support in the United States will find that the procedural and strategic choices made in the first weeks of a dispute have an outsized effect on the final outcome.
Outlook: where US force majeure doctrine is heading
US commercial litigation has generated a significant body of post-disruption case law over the past several years. The dominant judicial trend is clear: courts are not expanding force majeure doctrine. They are applying existing principles with renewed rigour. The message from the appellate courts of New York, Delaware. Additionally, the federal circuits is consistent. commercial parties are expected to allocate risk through their contracts. Additionally. Courts will not substitute their judgment for the parties' choices after the fact.
Several trends, however, are worth monitoring. First, there is growing interest among sophisticated commercial parties in importing civil law hardship concepts into US-governed contracts through express clause drafting. International bodies such as the International Chamber of Commerce have published model hardship clauses that US practitioners are beginning to adapt. Whether US courts will interpret these clauses generously – or construe them as narrowly as they construe force majeure provisions – remains to be seen.
Second, the increasing use of material adverse change and material adverse effect clauses in M&A and financing transactions is creating a body of litigation that runs parallel to the force majeure debate. Courts are developing a more nuanced understanding of what constitutes a systemic risk versus a party-specific risk. This distinction – which courts use to determine whether a MAC clause has been triggered – may eventually influence how force majeure clauses are interpreted in analogous situations.
Third, arbitral tribunals operating under JAMS and AAA rules have shown somewhat more flexibility than courts in interpreting force majeure clauses. Particularly in international commercial arbitrations where the parties have chosen a governing law other than a US state. This creates a strategic reason to draft dispute resolution clauses that specify arbitration rather than court litigation, particularly for cross-border contracts where civil law hardship concepts may be relevant.
For SEC-registered entities, regulatory developments may impose additional obligations on companies that experience material contract disruptions. The trend toward greater disclosure of supply chain and operational risks in annual and quarterly filings means that force majeure disputes are increasingly likely to have a securities law dimension alongside the commercial contract analysis.
The overall outlook is one in which the US courts will continue to enforce contract language as written. The gap between civil law and common law approaches will remain a source of cross-border tension. Additionally, the value of expert legal counsel at the drafting and early-dispute stages will only increase. Businesses that treat force majeure as a standard boilerplate clause – rather than as a carefully calibrated risk allocation instrument – do so at their commercial peril.
Frequently asked questions
Q: How do courts in the United States actually interpret force majeure clauses in practice?
A: US courts construe force majeure clauses narrowly and focus on the specific language chosen by the parties. Courts apply the principle of ejusdem generis, so a catch-all phrase at the end of an enumerated list will typically be limited to events of a similar character to those listed. The party invoking the clause must also show that the event was the direct cause of non-performance – not merely a contributing factor – and that reasonable mitigation steps were taken.
Q: Is there a standalone hardship doctrine in US commercial contract law?
A: The United States does not recognise a general hardship doctrine equivalent to the civil law concept of rebus sic stantibus. The closest domestic instruments are the doctrine of frustration of purpose and the commercial impracticability defence under the Uniform Commercial Code. Both apply only in narrow circumstances and do not automatically entitle a party to renegotiate or exit the contract. Courts in most states, including New York and Delaware, are reluctant to imply any duty to renegotiate when commercial conditions change.
Q: What should a foreign business do immediately when a disruptive event threatens performance of a US contract?
A: The first priority is to review the contract language carefully – the force majeure clause, governing law, dispute resolution, and notice provisions all interact. Written notice must typically be sent within the contractually prescribed window, which is often 10 to 30 days. Engaging a lawyer in the United States with cross-border experience at this stage is critical, because a missed notice deadline can waive the defence entirely. Documenting mitigation efforts from day one is equally important, since courts will look closely at what steps were taken to minimise the impact of the disruptive event.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions on commercial disputes, contract enforcement, and cross-border litigation strategy. As a law firm serving United States and Americas clients. Our team combines Portuguese civil law expertise with English common law tradition. a dual perspective that is directly relevant to force majeure and hardship disputes where civil law and common law systems collide. Our dispute resolution practice covers US federal court proceedings, JAMS arbitration, AAA arbitration, and enforcement of US judgments and awards across the Americas, Europe, and beyond. We advise international entrepreneurs, in-house counsel, and institutional investors who need results-oriented guidance across multiple legal systems. The firm's attorneys have advised on commercial litigation and contract disruption matters spanning both civil law and common law jurisdictions. Additionally. Our Lisbon base provides direct access to EU and Atlantic regulatory conditions alongside our common law enforcement capabilities. To explore legal options for managing a force majeure or hardship dispute under US contract law, schedule a consultation at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.