Court: Change In The Market Wasn’t A “Force Majeure”

A cautionary tale about contract writing in a Michigan case, out of the solar power industry. A plaintiff argued that the Chinese government entered the solar panel market to an extent that caused major loss in value to its contracted “take-or-pay” purchase of $1 billion worth of a substance called polysilicon, and that constituted a force majeure event that should void the contract. Both a trial court and a Michigan appeals court said no dice. The “very reason for entering a take-or-pay contract is to insure payment to the producer in the event of a substantial change in the marketplace,” the appeals court said. This case, writes Barnes & Thornburg attorney Kara Cleary, suggests a number of things to keep in mind when formulating a force majeure clause, particularly in a take-or-pay commercial contract.