Alberta’s business community is no stranger to the unpredictability of natural disasters. From the devastating floods in Calgary in 2013 to the wildfires that ravaged Fort McMurray in 2016 and the ongoing wildfire threats that increasingly mark Alberta’s summers, extreme events can disrupt commerce, displace people, and destroy infrastructure. When such disasters occur, they often trigger a little-known but critical clause in many commercial contracts: the force majeure clause.

Force majeure clauses are designed to allocate risk when extraordinary, unforeseeable events prevent a party from fulfilling contractual obligations. However, invoking force majeure is not always straightforward. In Alberta, courts interpret these clauses narrowly, and many businesses only discover their limitations when it is too late.

Understanding Force Majeure Clauses

A force majeure clause, often called an “Act of God” clause, excuses one or both parties from performing the contract when certain events beyond their control occur. The goal is to provide temporary or permanent relief from obligations without liability for breach.

These clauses typically list qualifying events, which may include war, terrorism, strikes, government orders, pandemics, and natural disasters such as floods, fires, or earthquakes. However, the enforceability of a force majeure clause depends heavily on its wording and the factual context in which it is invoked.

In Alberta, courts will closely examine the language of the clause to determine:

• Whether the event fits the definition provided;
• Whether the event made performance truly impossible, not merely inconvenient or more expensive;
• Whether the party invoking the clause took reasonable steps to mitigate the impact; and
• Whether the event was reasonably foreseeable when the contract was signed.

Alberta’s Legal Landscape on Force Majeure

In the absence of legislation specifically governing force majeure, Alberta courts follow principles rooted in contract law and precedent. Canadian courts have consistently held that contracts must be enforced as written. Therefore, a party seeking to rely on force majeure must strictly adhere to the language of the clause and cannot rely on implied or vague assertions of hardship.

The Alberta courts also distinguish between impossibility and impracticality. If a flood destroys a supplier’s facility and makes it impossible to fulfill an order, a force majeure clause that includes floods may excuse performance. However, if a wildfire causes delays or increases transportation costs, and the supplier could still fulfill the contract with effort, the clause may not apply unless it specifically includes disruptions or delays.

Importantly, Alberta courts generally reject attempts to use force majeure as an escape hatch from poor planning, economic downturns, or general business risk.

Lessons From Past Natural Disasters

The 2013 Calgary Floods

The 2013 floods that struck Calgary and surrounding communities resulted in billions of dollars in damage and widespread business interruption. For many businesses, the floods rendered commercial spaces unusable, disrupted supply chains, and forced cancellations of service contracts and event bookings.

In the wake of these floods, Alberta courts were faced with litigation involving cancelled real estate transactions, interrupted construction projects, and unfulfilled delivery contracts. In reviewing these cases, courts examined whether force majeure clauses specifically referenced flooding and whether the affected party had truly been prevented from performance or simply delayed.

One notable lesson from the litigation that followed was the importance of specificity. Contracts referencing “Acts of God” without enumerating flooding or natural disasters faced greater legal scrutiny. In contrast, contracts that explicitly included flooding and provided detailed procedures for notice and mitigation were more likely to support a valid invocation of force majeure.

The 2016 Fort McMurray Wildfires

The 2016 wildfires in Fort McMurray, one of the most costly natural disasters in Canadian history, triggered widespread evacuation, significant economic losses, and long-term disruption to oil sands operations and local businesses. Many companies were forced to halt operations entirely. Others faced partial shutdowns, workforce displacement, or damage to facilities.

As in the 2013 floods, the enforceability of force majeure clauses in this context came down to the contract’s language. For example, some construction contracts were suspended or terminated when force majeure was validly invoked, while others resulted in legal disputes when one party believed that performance was still possible.

In construction and energy contracts in particular, the wildfire highlighted the need for clear allocation of risk related to site access, evacuation orders, and government-mandated shutdowns. Alberta courts reviewing post-wildfire disputes reiterated that only unforeseeable and uncontrollable events meeting the contractual definition will excuse performance.

COVID-19 and the Broadening of Force Majeure Claims

Although not a natural disaster in the traditional sense, the COVID-19 pandemic significantly broadened awareness of force majeure clauses across Alberta’s business landscape. During 2020 and 2021, courts were inundated with disputes over whether pandemic-related shutdowns or public health orders qualified as force majeure events.

These cases further underscored the importance of clause wording. Contracts that explicitly mentioned “epidemic,” “pandemic,” or “government orders” were far more defensible than those that omitted such references. Courts also looked for evidence of reasonable efforts to perform obligations or mitigate harm, reinforcing the standard that force majeure does not automatically absolve liability.

For Alberta businesses, the pandemic served as a wake-up call to revisit force majeure clauses in light of a broader range of disruption risks, including natural disasters, climate events, and other global phenomena.

Best Practices for Alberta Businesses Drafting Force Majeure Clauses

Given the province’s exposure to floods, wildfires, and extreme weather, Alberta businesses should proactively address force majeure in contracts. Some key considerations include:

• Clearly define what constitutes a force majeure event, specifically referencing natural disasters relevant to Alberta, such as wildfire, flood, and severe weather.
• Include procedural steps, such as prompt written notice requirements and obligations to mitigate damages or seek alternative methods of performance.
• Clarify whether force majeure excuses performance entirely, delays it, or permits contract termination.
• Address the duration of the force majeure event and when either party can exit the contract if the disruption persists.

Well-drafted clauses can reduce uncertainty and litigation risk, and ensure both parties understand their rights and obligations in the face of uncontrollable events.

Lessons for Litigants: Proving a Force Majeure Event in Court

When a business dispute arises over a failed contract during or after a natural disaster, the burden is on the party invoking force majeure to prove:

1. That the event qualifies under the clause;
2. That it directly prevented contractual performance;
3. That they took all reasonable steps to overcome the disruption; and
4. That they complied with all procedural requirements of the contract.

Evidence is critical. Documentation showing government orders, facility damage, supply chain failure, or evacuation notices may be necessary to substantiate the claim. Alberta courts will scrutinize whether performance truly became impossible or merely more difficult.

Businesses should consult legal counsel as early as possible when a natural disaster may give rise to a force majeure event. A misstep in the initial response, such as failing to provide timely notice, can undermine an otherwise valid claim.

Proactive Preparation for the Next Alberta Disaster

Force majeure clauses can provide vital legal protection for Alberta businesses operating in a province known for both economic volatility and natural hazards. However, they are not cure-alls. To avoid business disputes or succeed in litigation, parties must understand the limits of force majeure and tailor their contracts accordingly.

As climate change increases the frequency and severity of natural disasters, Alberta businesses must take a more thoughtful and forward-looking approach to risk management in contract drafting. Whether you are a small business owner, a commercial landlord, or a major industrial operator, now is the time to review your contracts with experienced legal counsel.

Getz Collins and Associates: Top-Tier Business Law Services in Calgary & Strathmore

If you are currently involved in a business dispute over a force majeure event or need help drafting more resilient commercial agreements, Getz Collins and Associates is here to help. Our team of skilled civil litigation lawyers combine in-depth knowledge of Alberta’s legal environment with decades of experience resolving complex business issues. Contact us today online or call (587) 391-5600 for practical, strategic guidance.