Force majeure

In a business sale, a force majeure clause becomes relevant if something catastrophic happens between signing and closing, and it can determine whether a buyer is allowed to delay or walk away from an otherwise binding agreement. What actually counts as force majeure is entirely a matter of how the clause is drafted and what events it lists.

The mistake people actually make

Assuming force majeure covers any bad turn of events in the business — a key customer leaving, a slow season, a supplier price increase. Canadian courts read these clauses narrowly and tie relief to the specific listed events; something that is merely inconvenient or commercially difficult is not the same as something that makes performance genuinely impossible.

How it differs from a material adverse change clause

A material adverse change clause is about deal-specific deterioration in the target business between signing and closing. A force majeure clause is about external, catastrophic events affecting the world the deal happens in, regardless of the target’s own performance. The two are often discussed together but protect against different risks.

The Quebec difference

Quebec's Civil Code defines "superior force" as a codified doctrine that can excuse performance even without a contract clause saying so, whereas common law provinces recognize force majeure only where the contract itself defines it, otherwise falling back on the narrower common law doctrine of frustration.