What Force Majeure Means in Property Contracts and Why it Causes Disputes

When something unexpected happens that stops a property deal or lease from moving forward, many people turn to a clause called force majeure. It is a section in a contract that covers extraordinary events that are completely outside of anyone’s control. These are the kinds of events no one can plan for, and no one can prevent.

In property contracts, force majeure exists to give both sides a plan for what happens if the unexpected makes it impossible to meet the terms of the agreement. In Canada, these clauses are treated very carefully. Courts look closely at the exact words in the contract and usually expect the specific event to be clearly listed in order for the clause to apply. The event must also make performance truly impossible, not just inconvenient, or more expensive, which can lead to property contract disputes.

What Counts as a Force Majeure Event

A force majeure clause usually lists the events that qualify. These are often things like natural disasters, war, terrorism, sudden changes in government rules, public health emergencies, or major labour disruptions. The important part is that the event must cause a direct inability to follow through on the contract. If the work can still be done, even if it is harder or costs more, the clause will not apply.

The clause also outlines what happens next. Unlike the common law doctrine of frustration, which automatically ends the contract, a force majeure clause can allow for more flexible solutions. It may pause obligations, extend deadlines, or temporarily adjust financial responsibilities, such as rent in a commercial lease. The party using the clause is usually expected to take reasonable steps to reduce the impact of the problem and return to normal performance as soon as possible.

Why Force Majeure Clauses Are Important in Canada

Force majeure clauses can prevent major disputes at difficult times. A well-written clause gives both sides more control over how to deal with extraordinary events and may prevent property disputes.

These clauses also help manage risk. When both parties know what happens if a disaster or major disruption occurs, it reduces uncertainty and makes conflicts less likely. This became especially clear during the COVID-19 pandemic. Some tenants were able to pause rent obligations because their lease specifically included government closures as a qualifying event. Others were not protected because their contracts excluded financial hardship from the list of force majeure events. The smallest wording differences made a significant impact on the outcome.

Because of this, negotiation is extremely important. Standard property contracts in Ontario often do not include a force majeure clause. If the parties want this protection, they need to add a customized clause that reflects the specific risks involved in the deal.

Handling Disputes About Force Majeure Events and Why Legal Support is Key

When a force majeure situation arises, disagreements often occur. One party may believe the clause applies, while the other may insist that it does not. In these disputes, clear contract language becomes essential, as well as the guidance of an experienced lawyer. A lawyer can review the exact wording, assess whether the event qualifies, and help determine what obligations remain in place.

If a dispute escalates, a lawyer can also assist with negotiation, mediation, or litigation to resolve the issue fairly and efficiently. Having legal support early often prevents the situation from becoming more expensive and more complicated.

Need Advice About a Force Majeure Clause and How It Affects a Property Dispute? Give Us a Call

A force majeure clause can be a valuable tool in a property contract, but its usefulness depends entirely on how well it is drafted. Clear, detailed wording gives both parties protection and a roadmap for dealing with extraordinary events. When uncertainty arises or a dispute begins, working with a lawyer helps ensure that the clause is applied correctly and that both sides understand their rights and responsibilities.

If you need advice or representation in a property dispute involving a force majeure clause across Simcoe, Grey-Bruce, Muskoka or anywhere in Ontario, reach out to Gionet Fairley Wood LLP. Our experienced lawyers can guide you on the next steps to take and the best way to proceed. Contact us today at (705) 468-1088 or visit our website to schedule a consultation.

***The information provided in this blog is for general informational purposes only and should not be construed as legal advice. If you have legal questions, we strongly advise you to contact us.