Vis Major

The Latin word Vis Major means a “superior force”. What this means to business contracts or individuals is what we will cover in this article. We will also see the events encompassing the word Vis Major in terms of its coverage in legal terms in business contracts and insurance. 

What is Vis Major?

Vis Major is defined as an “Overwhelming Force” or an “Act of God” in various dictionaries. An irresistible force that may cause a loss in terms of damage or destruction that results immediately from a natural cause that could not have been prevented by prudence, diligence, and care by any of the parties. 

So, what might it include? It may refer to hurricanes, tornadoes, floods, earthquakes, etc. Its nature and power are uncontrollable and thus may relieve either party from liability in terms of being obliged to the contract agreement. As an individual, you should understand that in the case of property insurance, you must thoroughly review your policy to ensure what you want and what the policy will deliver.

Note! Vis Major are activities not amenable to human intervention and, therefore, must be carefully composed and understood by all.

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Understanding Vis Major

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While covering the natural actions mentioned above, Vis Major is also considered force majeure (French: overwhelming force) in legal terms for contractual arrangements. It is a clause in contracts that exempts all the parties from legal obligations, essentially when an exceptional event or circumstance occurs that is beyond the control of any of them. These events or acts could be war, strike, riot, crime, epidemic, or sudden legal change that prevents all the parties from following the contractual agreement. Such contracts generally exclude the events described as an act of God and keep it as a separate clause that legally differs, though it remains part of the contract law.

In specific commercial contracts, Vis Major also applies certain clauses which are directly related to the acts of third parties and are beyond the control of either party. These events could be a failure by a supplier or a subcontractor to fulfill the commitment in terms of supplies or distribution.

Suspension or termination is often specified in the contract. In case of an event related to Vis Major, generally, the parties suspend the agreement or deliverables for a specified period. Thus, it is a temporary suspension and not a permanent termination of the contract agreement in most cases.

Although the term Vis Major covers events such as war, riots, or strikes, including these events as part of a contract depends upon the region or country where the parties operate. Hence, you must understand the legal obligations specific to that region or country before entering into a contractual agreement.

Example

An example would be a scenario where a dam burst due to a flood, and the supplier cannot meet the deadline due to this unforeseen incident. According to the contract, the supplier can fulfill his obligations after the dam is built or another route becomes available. In such cases, the terms of the agreement are revised.

Events Vis Major does not cover

Negligence or malfeasance (an act of intentional damage by one of the contract’s parties) does not form part of Vis Major since it is intended for unforeseen and unpreventable events. Vis Major does not cover expected and natural events. For example, although a hurricane would be covered, seasonal rainfall would not be covered.

You also need to understand that in the case of an insurance contract, events such as tornadoes, hurricanes, earthquakes, and floods are often not covered, and the insurance company is not responsible for any compensation during such events. Thus, the insurer is not liable in case of loss or damage to your property, such as a tornado.

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Special coverage for Vis Major

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Several insurance companies provide policies that cover Vis Major events as described above. However, they come with an additional surcharge that must be paid by the person requesting the inclusion of such items. The premium is usually very high depending on the chances of occurrence of the events included in the insurance policy.

At places where these so-called acts of God are negligent, and historically it is proven, then the insurance companies may allow coverage. The acts like floods, lightning, or earthquakes are generally part of such policies. Rates are relatively reasonable and affordable since the chances of occurrence are meager.

In most regions or countries, comprehensive car insurance usually covers events such as falling trees or running into large animals such as deer or cows. Including such events in the policy obliges the insurance company to compensate the car owner.

The bottom line

Vis Major covers an irresistible natural occurrence that causes damage, disruption, or events beyond humans’ control or at least is not intentional. The events covered here can be an act of God not influenced by humans or may even be acts created or done by humans but not directly or indirectly related to the parties involved in a contract.

Insurance policies may or may not cover losses resulting from a Vis Major, so it is essential that the parties know and understand these terms in advance. Therefore, carefully read the terms of contracts and insurance policies.