Opinion ID: 779646
Heading Depth: 4
Heading Rank: 1

Heading: Force Majeure

Text: 41 Provision B8.21 of Seaboard's contract is a force majeure clause. It states, in pertinent part, that a contractor qualifies for a contract term adjustment where the: 42 [contractor] experiences delay in starting scheduled operations or interruption in active operations either of which stops removal of Included Timber from Sale Area through curtailment in felling and buckling, yarding, skidding and loading, hauling or road construction, as scheduled under B6.31, for 10 or more consecutive calendar days during a Normal Operating Season due to causes beyond Purchaser's control, including but not limited to acts of God, acts of the public enemy, acts of Government, labor disputes, fires, insurrections or floods. 43 Seaboard argues that there were a number of distinct acts of government that occurred in the early 1980's, e.g., new monetary control procedures and the deregulation of savings institutions, which led to an increase in interest rates and a slump in the timber market. Seaboard asserts that, because the weakness in the timber market was beyond its control and prevented it from harvesting timber, the Forest Service was obligated to grant Seaboard a term adjustment. Because the Forest Service refused, Seaboard argues that the Service breached the contract, relieving Seaboard of liability. The Court of Federal Claims rejected this defense as a matter of law. We affirm the holding of the court. 44 First, as the Court of Federal Claims recognized, the contract required Seaboard to request a term adjustment at least ten calendar days before the termination of the contract term. Seaboard made no such request. Even if Seaboard had made a timely request for an adjustment, however, the Forest Service was under no contractual obligation to grant it. 45 We find no case in this court or its predecessor holding that the phrase acts of Government in a force majeure clause is so broad as to include government fiscal or monetary policy decisions. Such acts have only an attenuated effect on the contracts at issue, at most making performance by the timber contractors unprofitable. We hold that the phrase acts of Government in the context of Provision B8.21 does not cover such acts. 46 Our sister circuits have held that government policies that affect the profitability of a contract but do not preclude performance should not be considered acts of government for force majeure clause purposes. See, e.g., Langham-Hill Petroleum, Inc. v. S. Fuels Co., 813 F.2d 1327 (4th Cir.1987) (rejecting claim for relief under force majeure where the government of Saudi Arabia acted to cause a collapse in world oil prices, making a contract unprofitable for one party); N. Ind. Pub. Serv. Co. v. Carbon County Coal Co., 799 F.2d 265 (7th Cir.1986) (holding that a government order denying a request from a utility to pass increased coal prices along to its customers did not excuse utility from a long-term contract to buy coal even though contract was unprofitable). A force majeure clause is not intended to buffer a party against the normal risks of a contract. The normal risk of a fixed-price contract is that the market price will change. N. Ind. Pub. Serv. Co., 799 F.2d at 275. 47 Seaboard directs our attention to Vinegar Hill Zinc Co. v. United States, 149 Ct.Cl. 494, 276 F.2d 13 (1960) and Eastern Air Lines, Inc. v. McDonnell Douglas Corp., 532 F.2d 957 (5th Cir.1976). These cases do not support Seaboard's position. In Vinegar Hill Zinc, the grade of ore from a zinc mine specified in a contract proved to be far below the expectations of the parties. This was beyond the control of the contractor and occurred despite the contractor's diligence. The Court of Claims held that a force majeure clause in the contract entitled the contractor to an extension of time in which to perform. Vinegar Hill Zinc, 276 F.2d at 14-16. Seaboard makes no analogous claim that the quality of the timber did not meet each party's expectations. In fact, it admits that the timber was of sufficient quality. In Eastern Air Lines, there were delays in the delivery of aircraft to Eastern Air Lines as a result of government priority orders during the Vietnam War. The Fifth Circuit held that an excusable delay clause that provided that McDonnell Douglas would not be responsible for delays due to, inter alia, any act of government, governmental priorities, allocation regulations or orders affecting materials, equipment, facilities or completed aircraft excused McDonnell Douglas from liability for the delays in delivery. Eastern Air Lines, 532 F.2d at 988, 996. In contrast, Seaboard has not directed our attention to any contractual language specifying that the monetary measures taken by the government are to be understood as acts of government for the purposes of the force majeure clause. Nor has Seaboard shown that the government ordered it to harvest some other timber, thus tying up capacity and precluding it from performing on the What contract. 48 Seaboard entered into a fixed-price contract with the Forest Service. The contract allowed for term adjustment if acts of government prevented removal of timber. At most, the government's acts indirectly made performance of the What contract unprofitable. The timber was of sufficient quality, and Seaboard simply made a business decision not to harvest. Timber prices fell and Seaboard must bear this market risk in the absence of contractual language that directs otherwise. For these reasons, the Court of Federal Claims did not err in holding that Seaboard's force majeure defense fails as a matter of law. 49