The Feb. 13-17, 2021, winter storm, referred to in news reports as Winter Storm Uri, was a proverbial “perfect storm” in a number of respects, not the least of which was the way it affected the natural gas industry in Texas. Many had renewed occasion for in-depth analysis of not only the force majeure provisions in their agreements, but also Texas and New York law, which govern many of the applicable agreements as well as the commonly adopted industry forms such as ISDA and NAESB. The winter storm prompted the discovery that there was more to these standard or boilerplate terms than many in the industry had previously assumed.
While force majeure was understood at common law to excuse performance due to some intervening, unforeseeable circumstance, such as an act of God, beyond the non-performing party’s control that delays or prevents performance, whether or not force majeure applies depends on specific agreement of the parties. The cause of the lack of performance is crucial to understand. Though under some circumstances mundane or recurring events such as “freezing weather” can constitute “acts of God,” the “pricing fluctuation” or “market conditions” that often accompany these events do not, unless specifically included within the scope of the force majeure clause. As a result, courts in Texas and other jurisdictions, when addressing questions of force majeure in the context of gas supply contracts, have undertaken a case-by-case analysis to force majeure based on the language of the contracts and the unique circumstances of each event.
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