What is force majeure, and how does it apply to Canada now?

Force majeure is a contract clause that can pause duties when events like war or port closures make performance impossible. With Iran tensions and reports about the Strait of Hormuz, Canadian firms may rely on it for delayed deliveries or project setbacks. Success depends on wording, timely notice, causation, and mitigation steps.

How is a material adverse change different from force majeure?

A material adverse change typically appears in M&A and financing to address significant business deterioration, not temporary performance blocks. Force majeure handles specific events that stop performance. MAC standards vary by contract and are hard to prove. Force majeure is more event-focused and often lists triggers like war or blockades.

Do shipping disruptions alone qualify for force majeure?

It depends on the clause. Some list blockades, closures, or carrier unavailability. Others require using reasonable alternatives before relief applies. If performance remains possible through different routes at reasonable effort, a claim may fail. Documentation of cancellations, insurance refusals, and port notices helps show genuine impossibility.

What should Canadian issuers disclose to investors now?

Disclose if disruptions are material and reasonably estimable. Explain affected contracts, expected timing, mitigation plans, and any force majeure notices sent or received. Update risk factors and guidance in plain language. Transparency on shipping, costs, and project schedules helps investors assess earnings sensitivity and capital needs.

How do Quebec rules differ from common law provinces?

Quebec’s Civil Code recognizes superior force even without a clause if an unforeseeable, irresistible event makes performance impossible. Common law provinces rely on the contract clause or a narrow frustration doctrine. National firms should align templates and choose governing law to reduce disputes over triggers and remedies.

Law and Government

Force Majeure March 8: Iran War, Hormuz Closure Rattle Energy Deals

ByDanny Kontos March 8, 2026March 8, 2026

Force majeure is back in focus as Iran tensions and reports of a Strait of Hormuz closure disrupt oil flows and freight lanes. For Canadian energy, shipping, and construction firms, contract performance, delivery timing, and margins are at risk. We explain how force majeure and material adverse change clauses work, what triggers apply to war and shipping disruptions, and what steps matter now. We also outline near‑term watch items for investors in Canada, from reroutes to disclosure and cost pass‑throughs.